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June, 2017

Beijing authorities shut down counterfeit bottled water operation

Authorities in Beijing's Chaoyang District have shut down a counterfeit bottled water production center and seized equipment used in the water's manufacturing. They discovered 10,000 labels of well-known water brands onsite, including "Nestle" and "Watsons." The counterfeiters allegedly sourced water from a nearby well in Heizhuang Village.

A resident tipped off authorities to the presence of a bottled water production line hidden in a warehouse in Chaoyang District's Heizhuang Village. When the police arrived, they discovered a truck filled with packages of bottled water. Two workers were caught affix​ing labels to the bottled water.

The 200-meter production area contained more than 400 empty barrels, three large plastic storage cans used to load large quantities of water, and three medium-sized plastic storage tanks.

Police have thus far been unable to learn the identity of the person in charge of the operation or the sales channels the counterfeiters used.

Analysis:

​Chinese consumers worry about water quality and have increasingly turned to bottled water as a safer alternative to boiling what's coming out of the tap. If bottled water isn't safe, then what is?

Nestle, in particular, has staked its reputation in China on providing safe drinking water to the masses. The words "safe" and "healthy" appear in the Chinese version of its logo. Given the importance of China to Nestle's business, the company cannot afford to lose the trust of Chinese consumers.

Furthermore, the well water that the counterfeiters used in this operation may have been unfit for human consumption. An April 2016 report by China's Water Ministry found that more than 80% of well water used in rural areas (in farms and households) and factories is too polluted to drink. 47.3% of the samples the Ministry analyzed were unfit for human consumption.

Dangerous contaminants have also been in bottled water. In January 2015, Beijing's Food and Drug Administration said that water made by the Chinese brands Wahaha and C’est Bon was unsafe to drink. C'est Bon water was found to contain 1400 times the permitted amount of bacteria.

A tightening of industry regulations could make the bottled water industry safer in China. The Bottled Water In China - Boom or Bust report published last year points out that regulated beverage companies are not required by law to reveal detailed information about their water sources. Nor are water makers obliged to publish the results from factory tests. That leads to "information asymmetry, where consumers believe that bottled water is clean, but really it could just be from the tap," the report notes.

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