Melamine- tainted milk powder
(“Assurance as rush on to buy foreign brands”, The Standards, September 18 2008,
“Dodgy baby milk chemical also found in ice cream”, The Standards, September 17, 2008,
“Thousands of mainland mothers flock to HK for imported formula”, The Standards, September 17, 2008.)
News Commentary Worksheet 2
A. Comprehension
Why did mainland
mothers flock to HK for
imported milk powder?
Who and how were
affected?
1. HK babies/Parents: face the
problem
of
milk
powder
Many household brands of milk
shortage
powder in China have been
2. Mainland babies: they used to
drink the
found to be contaminated with
melamine-tainted
melamine to varying degrees
milk powder regularly and
ingestion of which may lead to
kidney stones.
3. Distributor: how to increase
Why did milk dealers
add melamine into the
milk powder supplies
4. Retailers: how to allocate the
milk?
limited stock of milk powder
to avoid shortage
They tried to eliminate the
“strange Smell” and drive up
the protein content of milk.
Mainland mother flood to HK
for imported milk powder
How to make up the shortage of imported milk powder?
Retailer：
Distributors:
 Mainland mother were restricted to buy

Increase supplies of milk powder
at max. of three cans of milk powder at
each pharmacy.
Melamine- tainted milk powder/news commentary worksheet/08-09
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A. News Summary
(Alternative Method)
Please fill in the following table.
Mainlanders flock to Hong Kong to buy
imported milk powder
Underlying Cause:
Cause:
Cause(s)/
Reason(s)
Affected groups
in Hong Kong
Milk-related
food producers
Affected groups
in mainland
Related
Parties
Effects
Melamine- tainted milk powder/news commentary worksheet/08-09
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B. Economic Analysis
1.
What economic concepts are involved in the issue?
Put a () against all related concepts and
briefly explain how they are related to the issue.
Economic concepts
(a)
Change in Demand
Article
Line
A brief description of how these concepts
Parties
No.
No.
are related to the issue
involved
(  )Mainland mothers flock to HK for
uncontaminated imported milk powder.
Demand for imported milk powder increase.
(b)
Change in Quantity
(
)
Demanded
(c)
(d)
Price Competition
Non-Price Competition
(
)
(  ) Restricted number of cans purchased
at each pharmacy.
(e)
Shortage
(  ) Given the price of imported milk
powder remains unchanged, Qd>Qs
(f)
(g)
Surplus
Change in Supply
(
)
(  ) Distributor decided to increase the
supplies of milk powder.
(h)
Change in Quantity Supplied
(
)
(i)
Others
(
)
Melamine- tainted milk powder/news commentary worksheet/08-09
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C. Issue Inquiry
2(a)
Apart from milk powder, what kinds of product were also found contaminated with melamine?
Mr. Brown instant coffee and milk tea, White Rabbit Creamy Candy, Four Seas
strawberry-flavoured cake, Dutch Lady strawberry-flavoured sterilized milk in plastic bottles
produced in China, Yili yogurt-flavoured ice bar etc.
(b)
Many products which containing milk were found contaminated with melamine in food safety
tests.
i. How would this affect the revenue of the firm?
ii. How can they restore consumers’ confidence in their product?
Free Answers.
Consumers lose their confidence in these products, thus, their demand for these products will
decrease significantly. As a result, the total revenue of those related firm will decrease
sharply. Price reduction (price competition) is not a feasible way to restore consumers’
confidence, as price was not their greatest concern. Related firm should employ some
non-price competition methods. E.g. prove their products can meet standards to win back
consumers’ confidence.
3.
Luo Min, who transports milk powder from Hong Kong to Shenzhen, said she received 100 orders in the
three days after the milk powder scandal broke, nearly three times the usual demand.
South China Morning Post, September 17, 2008
According to the article, many mainlander flocks to Hong Kong for imported milk powder. Meanwhile,
many Hong Kong people also transport milk powder from Hong Kong and resell them in Shenzhen.
(a) Read the following personal profiles. Explain with economic terms, who would most likely to be a
parallel import dealer (i.e. a person who transports product from HK to mainland)?
Personal Profile
Personal Profile
Name: Mrs. Fa (花太太)
Name: Lai Kan (黎根)
Age: 45
Occupation: Housewife
Age: 38
Education Level: Primary School graduate
Education Level: Secondary School graduate
Household Income: $12,000 per month
Household Income: $45,000 per month
Place of residence: Fanling
Place of residence: Cheung Chau
Marital status: Married, with 2 kids, both of them are
Marital status: married, with a 2-year-old daughter
Occupation: Coach of windsurfing
studying in a secondary school
Melamine- tainted milk powder/news commentary worksheet/08-09
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Suggested Answer:
 Occupational Mobility: Mrs. Fa is a housewife. She has a higher occupational mobility to be a
parallel import dealer than Mr. Lai Kan. Mr. Lai is a coach, the opportunity cost of being a dealer
is the income earned as a coach. The cost of being a coach is the returns from reselling the
parallel goods. Since the cost of being a coach is lower than being a dealer, thus Mr. Lai would not
easily quit his job.
 Opportunity Cost: Mrs. Fa lives closely to mainland, thus her full cost (including traveling cost
and time spent on travel) is less than Mr. Lai’s. Thus, Mrs. Fa has a larger chance to be a dealer.
(b) By summarizing the above characteristics, suggest other type of people who would likely to be a
parallel importer. Explain with economic concepts.
_______________________________________________________________________________
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Remarks
Before making decision, teacher can remind students to evaluate the costs and benefits of being a
parallel import dealer.
Alternative Assignment:
Please prepare a report to discuss who gain most and lose most in the issue of milk powder
contamination.
Hints: Try to list out all the stakeholders in this issue and discuss who gain/lose. Then evaluate who
gain most and lose most in terms of monetary costs & benefits and non-monetary judgment. Students
can have some further investigation on this topic to enrich the report.
Conclusion
In this exercise, we have learnt to analyze an issue in a multi-perspective way. We have discussed the
effects of different related parties in the issue of milk powder contamination. Please briefly list out: (1)
the parties involved, (2) the effect(s) on them and (3) the economic reason(s) behind.
Melamine- tainted milk powder/news commentary worksheet/08-09
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Milk Powder
Contamination
Before preparing a piece of news commentary, you need to organize your ideas. Maybe the
following graphic organizer can help to prepare a piece of well-constructed journal.
Melamine- tainted milk powder/news commentary worksheet/08-09
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Inquiry:
E.g. who gain most and lose most in the
issue of milk powder contamination.
Cause:
Milk Powder
Contamination
related
economic
agents
Effect (s)
Economic
Reason (s)
______________ gain most, because…
Which
parties are
affected
______________ lose most, because…
most?
Explain your
evaluation.
Melamine- tainted milk powder/news commentary worksheet/08-09
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Annex I
Melamine- tainted milk powder
News Commentary
Name: ___________________ (
Class: ___________________
)
Marks: _________________
Date: _________________
Who gain most and lose most in the issue of milk powder contamination?
Please write a 400-word report with reference to the worksheets and your findings.
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Melamine- tainted milk powder/news commentary worksheet/08-09
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Alternative way to draw the conclusion
Reason (s)
Reason (s)
Reason (s)
Reason (s)
Reason (s)
Economic concepts
Economic concepts
Economic concepts
Economic concepts
Economic concepts
Stakeholder
Stakeholder
Stakeholder
Stakeholder
Stakeholder
Babies
Parents
Milk dealer
Distributors
Retailers
Mainland
Mainlanders flock to Hong Kong to buy imported milk powder
Hong Kong
Stakeholder
Stakeholder
Stakeholder
Stakeholder
Stakeholder
Parents/ babies
Milk-related
food producers
Parallel importer
dealer
Milk powder
distributor
Retailers
Economic concepts
Economic concepts
Economic concepts
Economic concepts
Economic concepts
Reason (s)
Reason (s)
Reason (s)
Reason (s)
Reason (s)
Melamine- tainted milk powder/news commentary worksheet/08-09
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