Shenzhen Futian People’s Court announced that a banned food additive was found in cakes made by Hsu Fu Chi Food, risking customer safety, and should pay restitution. However, Hu Jiaxun, president of Hsu Fu Chi International Ltd denies using BHT, and said the company wouldn’t recall these products, but consumers can choose to return them. Hsu Fu Chi announced the company’s intention of appealing the decision to a higher court.

The company is accused of using the antioxidant additives TBHQ and BHT, which are banned in China. These chemicals are used have been used in junk food-type products, protecting fats from breaking decaying and proving to be an effective preservative. Potential side effects have been debated with some claiming that the ingredients are cancer-causing agents.

At present, some supermarkets in Beijing, Shanghai and Guangzhou have stopped selling Hsu Fu Chi’s sesame sachima, peanut cushion and mango cake. Hsu Fu Chi, founded in 1992, is one of the leading confectionery companies in China.

International food giant Nestle acquired 60% of Hsu Fu Chi with $1.7 billion (about 11.1 billion yuan) on December 7 last year. The partnership with Hsu Fu Chi was regarded as an important move to fight with other international food giants such as Kraft, Mars and Unilever and at the same time to impose pressure to small and middle-sized Chinese local food companies such as Golden Monkey and Big White Rabbit.

Nestle speed up its expansion in Chinese market in recent three years that it bought in 70% of Yunan Dashan, the largest mineral water brand in Yunnan in 2010 and acquired 60% Yinlu, the largest canned rice porridge and peanut milk producer in China. “China will become the world’s second largest market for Nestle and the sales of Nestle will reach $10 billion in 3 to 5 years,” said CEO of Nestle China.

However, with the coming of candy and cakes boom over Spring Festival season, the exposure of Hsu Fu Chi’s food safety problem will affect the wishful thinking of Nestle.

Source: Morning Whistle Dec 2012

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