August 18,2008

Department Monopoly Power Grab Meets Resistance

By CSC staff

The General Administration of Quality Supervision, Inspection and Quarantine of the People's Republic of China (AQSIQ), which has been the focus in a number of Sino-US food quality disputes, may now be facing domestic lawsuits against its promotion of an electronic supervision service, and is being accused of abuses of power and monopolizing the food supervision market.

AQSIQ requires firms to register their products at, so that consumers can check online whether the goods they have bought are fake. Both companies, who are required to use the checking service, and consumers, who may see the need to use it, must pay the website. With its administrative monopoly, AQSIQ is putting private firms with their own anti-counterfeiting technology out of business. And, as AQSIQ has a financial stake in the website, these companies claim it is abusing its power to gain illegal profits.

The actual owner of Citic Guojian Information Technology Corporation, operator of the website, is Hong Kong-listed Citic 21CN Company, Ltd., which holds a 50% stake in the company, and paid 18 million yuan for AQSIQ’s information center to help that group gain a 30% stake in Citic Guojian.

It is not certain whether there is any official corruption involved in this case, but Wu Jianping, director of AQSIQ’s department of food production supervision, committed suicide some days ago by jumping from an apartment building. Before his death, he was being investigated by the government.

Wu Jianping’s suicide was first reported by Caijing magazine in this week’s issue. Before his death, government departments had been conducting a number of inspections of China’s food security system.

Profiting through compulsory requirements for market access is common among Chinese government departments, a blatant indication of how far China’s government needs to travel on its way to reform.

China adjusted the responsibilities of its main institutions this year, and will transfer detailed responsibilities of industry management to trade associations. This does not relieve worries, however, as the trade associations are often led by retired officials and corruption can find a place in these organizations. The National Dental Care Group under the State Food and Drug Administration, for instance, has been severely criticized by the public for using its position to make illegal profits.

To promote electronic supervision, the AQSIQ is trying to involve itself in the Food Security Law now being formulated, but this is being opposed by the majority of members of NPC Standing Committee, China’s legislative organ.

The NPC especially summoned legal experts and food producers among others to discuss the proposal of a "supervision code for food security." Most of the participants were of the opinion that it made no sense. The only supporter for the proposal was Citic Guojian.



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