Thursday, October 25, 2007

KFC Ditches Nestle, Teams up with Mongolian Sour Cow

I love fast food, and I love celebrity marriages. Better still, I love celebrity divorces.

This week's announcement about the tie-up between KFC and Mengniu Dairy has everything I need.

In June, Mengniu also pushed out Nestle in a deal with Starbucks.

Mengniu is the largest milk producer in China, a country not traditionally known for dairy products. But today, Xinhua reports, China is the third-largest dairy producer in the world - following the United States and India.

In part, it was foreign brands such as KFC - which has over 2000 outlets in China - that helped change that. I'm thinking of KFC's soft-serve ice cream, for example. Or Starbuck's lattes. Or the slices of cheese on McDonald's hamburgers.

According to the state-owned China Daily, the deal is a demonstration of faith in China product quality.

This past January, Mengniu became the "Official Dairy Product of the NBA in China." Last summer, Hong Kong Disneyland named Mengniu as its dairy supplier.

Mengniu literally means "Mongolian cow." I remember the company for its sponsorship of the Supergirl contest, a copy of foreign talent shows like "American Idol." The show was officially known as the "Mongolian Cow Sour Yogurt Supergirl Contest".

The contest has since been banned by the Chinese government for being, as far as I can tell, too non-conformist – but it did help catapult Mengniu to national prominence

In other countries, dairy companies are very conservative. Cheeses are made based on centuries-old formulas. Occasionally, someone will come out with an innovation like 2 percent milk, or a new flavor of yogurt, or organic cheese but, in the end, what can you really do?

My in-laws were dairy farmers in Massachusetts. The farm went out of business a couple of decades back – as a mature industry, milk is a commodity product. It's hard to make a business at it, except through vast economies of scale.

China proves that it doesn't have to be that way.

By allying itself with Supergirl, with the NBA, with Disneyland and Starbucks and KFC, Mengniu is nothing if not the epitome of cool. The Chinese daily industry in general is cool – fast growing, innovative, popular with the youth market.

And new dairy products are coming out at a rapid pace. Flavored milks and milk with chunks of real fruit, novelty ice creams, even "breakfast cheese."

But, as Li Bin writes in this week's feature about China's dairy industry, China still has a long way to go.

Despite being one of the world's leading producers of daily products, China averages 10 kg of dairy consumption per capita – a tenth of the consumption of the world average. Japanese consumption is 18 times higher. US consumption is 30 times higher. And the French – no surprise here, given their love of cheese – consume 50 times as much dairy as Chinese do.

If the pace of growth in China's dairy industry continues, China may soon eclipse the US in milk production. But it is already eclipsing it in innovation.

Thursday, October 18, 2007

Working Men Need Protection as Much as Women

Last week the China Daily explained a new labor law – due to come into effect on January 1 – that ostensibly protects women from job discrimination.

Ironically, the way that it does this is to list jobs that are "unsuitable for women."

These jobs including working in mines, cutting lumber, installing and removing scaffolding and carrying heavy weights.

On the heavy weights issue, there are plenty of burly women – and plenty of weak men. Those jobs might have physical strength requirements, but should be based on ability, not based on gender.

The other three restrictions are based not on physical ability as much as physical danger.

And, it is true, mining is not a safe environment these days in China. But it's not safe for anyone, whether male or female.

Rather than forbidding women from taking these jobs, the labor authorities should be cracking down on industries that violate safety standards.

After all, who would argue that men are more expandable than women? That their lives are worth less, and that they need fewer protections?

Okay, there are some women – maybe those going through a divorce, say – who might feel that way. But that's no reason to set public policy.

There's also the question of setting precedent.

If mining jobs are too dangerous for women, what about jobs requiring riding bicycles on city streets? Or jobs requiring long hours and stressful work, which might lead to heart attacks? Or police work, or fighting fires, or farm labor? Working on a farm is pretty dangerous work.

In the United States, for example, the farming industry as a whole is almost as dangerous as mining, with 22 deaths per 100,000 per year for farmers, compared to 24 deaths per 100,000 per year for miners. By comparison, the rate is 3.8 per 100,000 for all jobs, according to 2002 data from the US Bureau of Labor Statistics. Forestry and fishing also had high death rates.

The people with the most dangerous individual jobs – in the United States, at least – are timber cutters, fishers, pilots and navigators, structural metal workers, roofers, electrical power installers, farm workers, construction laborers, and truck drivers.

Does the same apply to China? Not exactly.

Last fall, Xinhua reported that the three most dangerous jobs in China are mining, policing, and journalism.

As an employer, can I now refuse to hire female business reporters on the principle that these jobs are dangerous? After all, there's a precedent -- the government has a policy in place of protecting women by keeping them out of dangerous jobs. And, if you work in television, there's also all that heavy equipment to lug around.

China's labor law is well-intentioned, but does the opposite of what it is supposed to do. I hope that the Labor Ministry takes another look at this issue before the law goes into effect.