What does the milk powder scandal mean for you, an SME, doing business in China?

I was interviewed by Public Radio’s Market Watch segment yesterday and their focus on the general economic conditions (downturn) headed into China got me thinking that there are certainly going to be more rather than less problems in the future.  Specifically, Scott Tong asked me, in regards to the current tainted milk powered case, “were you surprised? and do you think that more issues like this will come?”  The answer to the first question is “no.”  My (Chinese) wife has not allowed us to buy milk powder in China ever.  And the regularity of reports out of Hong Kong of rejected Chinese imports of pork, fish, chicken and various veggies has convinced us that living here is hazardous to our health—no joke.  We are very cautious about what we buy here but admit that if we headed every warning we’d never eat.Secondly, and more applicable to business, yes.  I expect that we’ll have more cases like this and like what happened in 2007 again.  Why?  Because as margins shrink and as the economy slows down (smaller and fewer orders) there will be more and more pressures on factory owners to increase or at least retain current levels of profits in any way they can.  While this may just be business as usual—for which you need to be testing/checking/monitoring to compensate--it means that your product quality is up to you and solely you.  As it always has been, actually.  The really unfortunate news is the CNN (and other) reports that the govt apparently knew about this before the 0lympics and decided to cover it up to make sure there was no bad news in August.  This further entrenches the belief that the laws that slow economic growth in the short term (labor law, green GNP and most other Chinese laws) look great on paper but enforcement will be increasingly lax by local governments that are still measuring success by money.Some people say that this will teach Chinese brands/companies a lesson in capitalism and the power of brand name recognition.  But why didn’t the last milk powered scandal teach this?  Why didn’t the lead paint, the non-adhesive tires, the tainted cough syrup, etc., etc., etc., scandals teach these lessons already and why is this time different?  When push comes to shove in this next year of poor domestic economic performance do you really think that things will be different?  Don’t count on it.Great analysis of the crisis at Image Thief and China Law Blog.Other good China/ASEAN news:ChinaThe global pinch is hitting home in China too.  Hmmm, not so independent after all.This is one of the best articles I've read recently on the Chinese economy and what it means for Australia (but it's good for the rest of us to read too).Industrial output from China is slowing down but how much is just the 0lympic affect?--We can't really read China data.Is China a threat (again)?Hong KongBest Courts in Asia.ThailandPolitical problems means less tourists so Thailand needs to shape up.  I guess you know who is influential in govt circles (e.g. military folk that control much of the sex trade).Logistics to open up in BKK.VietnamGrowing economy but poor transparency and confidence.