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Business
Print Edition> Business
UPDATED: March 25, 2013 NO.13 MARCH 28, 2013
Product Woes
Consumers have little in the way of recourse when their rights are violated. What needs to be done?
By Zhou Xiaoyan
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The SFDA said that an excessive use of antibiotics is a matter for the MOA. The MOA, on the other hand, claims that its responsibility lies only in the production process, and said the onus is on other ministries to deal with traces of antibiotics.

Analysts say it is imperative that the responsibilities of each department are clearly defined when it comes to ensuring food safety.

In response, China has decided to elevate the role of the SFDA. The proposed ministry-level General Administration of Food and Drug will be responsible for unified supervision on food and drug safety and quality during production, circulation and consumption. It will combine the functions of the existing State Council's Food Safety Office, the SFDA as well as the food supervision duties from the General Administration of Quality Supervision, Inspection and Quarantine and the State Administration for Industry and Commerce.

Another move is offering financial awards to citizens who inform the government of the malpractices of food companies. The State Council's Food Safety Commission established a system that earmarks financial rewards to whistle blowers, and last year 141,037 complaints on food safety were received. A total of 6,922 whistle blowers were financially rewarded, and the highest reward was 200,000 yuan ($32,200), according to the commission.

"As the next step, we will improve the incentive system, better protect whistle blowers and implement a national hotline," said Wang Xiaoyan, director of the coordination and guidance office under the commission.

A better legal system

Some consumers file lawsuits to protect their rights against less than savory products, but high costs deter many from taking legal action.

"Right now, the CCA receives about 500,000 cases every year, but that number can hardly compare to the total number of consumers whose rights have been infringed upon," says Qiu Jianguo, director of the complaints department at the CCA. "Statistics show that only 1 out of 20 people will file a complaint to the CCA or file a lawsuit when their rights are infringed upon. Why so? It's because of the high financial costs."

Some consumers spend years pursuing legal action. Even if they win in the end, the whole process was likely costly, and some have even lost their jobs for devoting so much time to their cases, Qiu says.

In sharp contrast with the hefty cost of legal action, compensation levels are too low. According to the CCA, almost 568.43 million yuan ($91.52 million) in losses was recovered last year. The average consumer compensation was about 1,125 yuan ($181).

Raising punitive compensation in China's legal system has been in demand for years.

"Consumers suffer from high costs when fighting for their rights and compensation levels should be enhanced to better protect them. According to China's Law on the Protection of Consumer Rights and Interests, consumers can only get double the original price of the product or service," says Chen Shu, an NPC deputy and Honorary President of the Guangzhou Lawyers' Association. "Compensation is too low. That's why most companies don't take the regulation seriously."

Zhang Luming, Director of the Publicity Department of the Anhui Consumers' Association, echoed Chen's view, adding that a minimum compensation standard should be set.

"Doubling the original price as compensation is far from enough to meet people's expectations. For instance, if a bag of milk is 2 yuan ($0.32), consumers can get 4 yuan ($0.64) for punitive compensation at most. That's way too little. So there should be a minimum punitive penalty," said Zhang.

Consumers in China are also without the option of a class-action lawsuit, a practice common in the United States and other nations. "In the United States, class-action lawsuits can result in damage compensation and punitive compensation, which are often of large sums of money. This can pose a big deterrent for law-breaking companies." notes a report in the 21st Century Business Herald.

Countless cases show that when confronted with large companies, Chinese consumers are often left to their own devices, which is too time-consuming, daunting and costly.

The lack of a class-action lawsuit system will lead companies to ignore consumer rights, Wang Zongyu, an associate professor in economic law at Renmin University of China told Beijing Review.

Wang said that although China's legal system has terms similar to a class-action lawsuit, the courts are unlikely to support them in practice for fear that the number of cases could spiral out of control.

"China should learn from the United States and introduce a class-action lawsuit system so as to better protect consumers. The system will enable consumers, who are usually in a weak position, to fight against powerful companies, especially mega-sized multinationals."

Email us at: zhouxiaoyan@bjreview.com

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