By John S. Eldred of Keller and Heckman LLP, Shanghai

THE CRISIS

The following represents a small sampling of similar recent headlines in major US newspapers: "Chinese Gluten Linked to Pet Deaths", "How US Should Approach China's Tainted Imports", "An Export Boom Facing a Quality Crisis; Customers Worldwide Pressing Beijing to Act After Tainted-Food Case", and "Farmed in China's Foul Waters, Imported Fish Treated With Drugs ­ Traditional Medicine, Banned Chemicals Both Used."

The crisis began in April, 2007 with the discovery of adulterated wheat gluten from China that was used as an ingredient in pet food that caused a large number of dog and cat illnesses and deaths. A major recall had ensued of many brands of pet food even before the problem was laid at the door of Chinese wheat gluten suppliers who had partially substituted melamine and other compounds for wheat gluten to reduce cost while seemingly not reducing protein content. This story, already large, became huge after the apparent deliberate adulteration of the Chinese component was discovered, and caused the media to begin to focus sharply on any story involving what normally might have been considered as a "routine" safety/quality/regulatory issue that would have otherwise gone unnoticed. In short order, there were numerous stories about diethylene glycol used in Chinese toothpaste and reported to be responsible for human deaths in Panama, the presence of Salmonella in Chinese-produced spice ingredients, and trace levels of unapproved (by the US) drugs in fish. The stories then spread to other industries - lead paint on Chinese toys, defective automobile tires, and other such news.