What Will Be Role of FDA in China?

Wednesday, November 19, 2008 8:21
Posted in category Uncategorized

Opening an office in Beijing for the most part is a well beaten path, unless you are of course opening the first China office of the United States Food and Drug Administration.

Certainly a reaction to the last 18 months of press on the quality issues, and certainly a move that comes at a very interesting time (given the recent FDA seizures in the US), I am personally very interested in this development and think that it is a great step in a number of ways:

1) A gateway between both governments at the agency level has been opened
2) The FDA, and other US based agencies, will learn a great deal about the complex issues that are found in China’s supply chain
3) Foreign firms, in China, will have a new platform through which their issues can be elevated (government advocacy), where they can go behind closed doors and work on the issues faced, and then have a”third party” to go through

Where the discussions became interesting was in the details

What will the role of the FDA be in China? What does their opening a store in Beijing mean for US consumers? Is this in response to the recent quality issues?

In addressing this, where I started was to discuss the context of their entrance. For example, China has 120 million farms (US 2 million/ EU 20-30 million), and so it is important to keep in mind that with 5 inspectors sitting in China, there is no credible way they can reach all these farms, much less the consolidators, logistics firms, or food processors.

that , their role was going to be limited to advocacy by pushing for higher standards, assisting China train their own inspectors, and manage the flow of information between the US and Chinese officials when things hit the fan.

Will the FDA be effective in China? Do the inspectors need to “understand China”, and if so how should the inspectors prepare themselves?

YES YES YES YES. and YES. In fact, given the complexity of China’s agricultural industry, it is imperative that they bypass all the expats in Beijing, head straight for the train station, and put on their hip boots.

this is an industry that needs to be seen and felt, not read about. The inspectors need to see what the system is from the ground as China’s break basket is not a single farmer tilling 2000 acres in their self-driven GPS John Deer combine (X Box not included), but it is about a family tilling a 6000 square feet of land. That the quality and application of fertilizers, seeds, and other inputs vary widely, that yields/ qualitie of outputs vary widely, and how all that feed back into the system.


What are the core issues of China’s food/ pharma supply chain? How wide spread are the problems? What role will this group have within that context?

Core problems, which are well documented in this AT Kerney report, are much like many other industries in China… high levels of fragmentation present huge barriers to effective quality control, consistency in quality, and enforcement of regulations… and that as a result, anything can happen.

their role, will essentially be to assist the Chinese government in training up their inspectors, and this is exactly what I think is the best means to their end (safe food). the risks though are huge. What will go into the training, how frequent are the refresher courses, etc will all impact the success of this project, and my hope is that they will start small, build out a core of professionals who will then build out another layer. If they are really smart, they will work hard to market the FDA seal of approval and provide a credible way by which these certifications can be verified. Make these inspectors a lot of money without the back handers, make sure they are doing their job, and get them to preach the gospel.

In closing, it is important to note that this is not a silver bullet, and that many many pieces need to fall into place (land reform, mechanized farming, improved inputs, farmer education, etc…. and that is just on the farm. It is a process that must also happen in the consolidation and processing as well.

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4 Responses to “What Will Be Role of FDA in China?”

  1. Ian Billard says:

    November 19th, 2008 at 8:55 pm

    Good article, but it’s important to note that the US Department of Agriculture (USDA) and US Foreign Agricultural Services have been in China for a long time (http://www.usdachina.org/contact_us_details.asp?functionID=110701 ) and have more of a “food” focus than that FDA (in spite of the “F” in their title). Good luck to both USDA and FDA–they’re gonna need it!

  2. Rich says:

    November 19th, 2008 at 9:09 pm

    Hi Ian.

    Very true. I have worked a lot with the Foreign Ag Service under USDA. Good people there, and have some of the best research around.

    Where I think their mandate is different is that USDA and FAS are doing work to bring American products into market, which will make them a valuable resource and ally.

    R

  3. David says:

    November 20th, 2008 at 9:08 am

    Richard,

    I heard your related comments on “Market Place” during the drive (prime) time National Public Radio broadcast in the US. Nice job.

    I don’t like all the hype around the FDA in China. It gives the Chinese breathing room. Americans (who will misunderstand the roll and tiny scale of the FDA office) will now be less skeptical of the quality of Chinese products. In fact, as your comments and the study point out, despite Chinese desire to improve, the problem is massive and endemic. I hope the US FDA in China will not be be another case study of foreign enterprises trying “To Change China.” They should focus on guidelines for the technical aspects of inspection, not how to implement regulate in modern China. See Jonathan Spence for more.

    Don’t put the cart in front of the horse. You said: “If they are really smart, they will work hard to market the FDA seal of approval and provide a credible way by which these certifications can be verified.”

    The second half of your statement is as unlikey to happen as it is critical. The FDA is right to ‘teach [the Chinese govt] to fish” by helping them establish a credible FDA-type organization of its own. However, the first half of the statement is pure folly. We should avoid any use of US FDA ‘branded’ certifications in China. The FDA brand will surely be abused immediately, widely and undetectably — undermining FDA certification here in the US.

    Think of it this way. Should the US Consumer Product Safety Board send inpectors to factories in China to inspect tennis rackets and lawn mowers. Of course not. Then why should the US FDA be in China inspecting asprin, soy sauce, corn starch or any other food or drug?

    Should the Chinese send ag inspectors to American ranches and slaughterhouses to certify beef? No. They rely on the USDA to do its job.

    Similarly, why should US taxpayers fund the solution to a problem that is essentially rooted in China, and the relationship between Chinese suppliers and downstream intl manufacturing and distribution companies?

    Let the Chinese step up and demonstrate that they can do this — give them assistance when they ask. I’m confident they have the resources, technical ability and desire to make it happen. It will take some time. Meanwhile, enforce product safety in the US. Refuse imports and levy very stiff and very public fines on importing companies. At this point, it is not good enough for US importers to say, ‘how could I have known my Chinese supplier made soy sauce out of hair….?’

    Some food for thought. None of it FDA certified.

  4. Rich says:

    November 20th, 2008 at 10:06 am

    David.

    Thanks. Glad my line made it! (listen to interview here)

    All fair points, and I am myself not one to preach down. I do think there is a role for certifications as will will encourage firms to reach and maintain the certifications, and you point out a problem in that there may be some who simply gain the certification without doing any work (ie. copying it). this is another issue altogether, but I did not mean that they should work to certify in mass. It should be exclusive to start out with, and as their inspectors come up, they can widen the program…. we are talking long term.

    As for the Chinese stepping up, again I agree, but I believe FDA has a lot of technical expertise that can be shared on structures, processes, and technologies. the should not try to own it, or force it.. simply share it.

    With regard to tax payers paying for this.. again, I will agree. to be honest, they shouldn’t pay for the big 3 bailout or the banking bailout either…. but we see how well that is being managed.

    R

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