A tough and expensive lesson from Fonterra

Fonterra executives under fire
Getty Images via DaylifeThe New-Zealand milk company Fonterra, with an unfortunate 43 percent equity in the now defunct Sanlu dairy compay, has been trying to wipe its own alley clean, after it lost much of its investment and name in the melamine milks scandal, report domestic media.
Main problem, and it might not sound unfamiliar to other companies, Fonterra had not clue what was happening to their partner in China and when it was informed about the upcoming scandal - much too late - it had not clue what to do.
There has been quite some debate on whether the New-Zealand company could have been held responsible at all, since they would have been forced not to disclose company secrets or did not want to let its Chinese partners lose face (as some halfhearted arguments sounded). But all those arguments falls short - it they ever have been valid - in cases of criminal neglects.
Since it will all be a matter of time, until the next Chinese company get themselves - and its foreign investors - in a food security alarm or otherwise, it does make sense for foreign companies to have a close eye on their participations in China and take full responsibility - or sell off of course.

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