Business Innovation to Combat Malnutrition Case Study Series 59430 Two Wheels Turning: Partnership in China's Soy Sauce Fortification Program Case A This case was coordinated IN NOVEMBER 2003, Chen Junshi was explained the various reasons why his Zhenji by Michael Jarvis (World preparing to launch the initial stage of what he colleagues now objected to participating in Bank Institute) and Bérangère Magarinos (Global Alliance hoped would become a nationwide program to the CDC iron fortification program. If Zhang for Improved Nutrition). combat iron deficiency and iron deficiency ane- could not persuade his colleagues at Zhenji to We would like to express mia in China. As a nutritionist and director of participate, Chen knew it would be an uphill our gratitude to the staff of the Food Fortification Office (FFO) at China's struggle to win and sustain the backing of Shijiazhuang Zhenji Brew Group Company, Ltd, the Center for Disease Control and Prevention other manufacturers. Center for Disease Control (CDC), Chen headed a team of CDC experts and Prevention (CDC) in that had worked since 1997 to develop and China and their partner implement a program to educate Chinese about Responding to Anemia in China organizations for their invaluable contributions the dangers of insufficient iron intake and work to the case's development. to alleviate the problem. As in other primarily agrarian developing economies where meat traditionally was con- This case was commissioned Almost from the start, Chen and his colleagues sumed only sparingly, iron deficiency and iron by the World Bank Institute with the support of concluded that any educational outreach they deficiency anemia (IDA) was a longstanding the Global Alliance for might do to combat iron deficiency would problem in China (see Exhibit 1). China's na- Improved Nutrition. fail unless consumers had not just knowledge tional census of 2002 estimated that a national of the problem, but the means to increase average of 20.6% of women of childbear- their iron intake. To this end, CDC experts ing age suffered from IDA. Among children had sought out and collaborated with some less than two years old, IDA prevalence was of China's leading condiment manufacturers, estimated at 24.2%, and at 21.5% among encouraging them to produce and distribute those over 60. Rural women showed higher iron-fortified soy sauce. incidence of IDA than urbanites. China's 2002 survey concluded that 25.3% of pregnant Among these was Shijiazhuang Zhenji Brew women in urban areas had IDA, compared to Group Company, Ltd. (Zhenji). Zhenji's chief 30.4% of those surveyed in rural areas. Lactat- executive officer, Zhang Lin, was among the ing women with IDA comprised 27.3% of city- strongest private sector supporters of the dwellers surveyed, and 30.4% in the country- CDC iron fortification program. Yet Chen had side. Adult women remained at risk even in just arrived at his CDC office in Beijing to find wealthy areas of China, added CDC officers: an urgent phone message from Zhang. Chen "In parts of southern Jiangsu Province (just put down the phone 30 minutes later with west of Shanghai), IDA prevalence reached a mounting sense of alarm. Zhang had just 30­40%. China's experience shows that it is Copyright © 2008, WBI - World Bank Institute, Washington, DC, United States, and GAIN - Global Alliance for Improved Nutrition, Geneva, Switzerland. The views expressed in this paper are those of the authors only. false to believe that micronutrient deficiencies will as well as control of disease. Already well-respected disappear as a country gets richer." among the public, the CDC received a boost to its reputation that year by its steady, reassuring perfor- mance during the SARS scare that raced through China's Center for Disease Control China in late 2002 and early 2003, killing 800 people and Prevention worldwide. The CDC originated as a group of scientists tasked with preventing the spread of infectious disease. Developing an Iron Fortification Nutritional issues were not under its purview, Program for China though persisting malnutrition had made the Chinese government attentive to food sufficiency Iron deficiency and IDA could be overcome by eat- since 1949. This concern had manifested itself ing red meat, consuming iron pills or dietary sup- since the 1950s in efforts to increase production of plements including iron, or by fortifying foods with grains and other staples. The CDC itself focused on iron. All of these approaches presented challenges in basic research in preventative medicine. As China's emerging markets, where few in need could afford a economy took off in the 1980s and 1990s, redressing meat-rich diet, and where supplements were expen- malnutrition became much less of a state prior- sive and not widely available outside urban centers ity. State spending on healthcare declined, support without government subsidy and distribution. lapsed for the "barefoot doctors" who brought treat- Fortification was not a new approach ­ China and ment to China's remote areas, and access to quality many other countries had experience adding iodine medical care ­ formerly a state-provided service ­ to salt or fluoride to water ­ but iron fortification increasingly involved supplemental payments to was typically accomplished by fortifying wheat flour. doctors and staff. For China, however, CDC officials asserted that Into the 1990s, nutrition policy in China fell under fortified wheat flour was not an ideal solution. The the purview of the Ministry of Health (MOH), and Chinese tended not to consume bread or other nutrition improvement was done by the Nutrition goods baked from flour in significant quantity. and Food Safety Department of the local CDC of- Wheat flour was not uncommon in northern Chi- fices. However, attention to nutrition policy waned nese cuisine as an ingredient for noodles or as a part as food safety grew more prominent. A 1998 reorga- of steamed dumplings, but rice remained China's nization of MOH shrank policy attention on nutri- staple grain, especially in southern China, where tion further. Noting the gap between China's need growing conditions could support several annual for nutrition and the extent of policy devoted to it, crops. However, the wide geographic dispersion of CDC officers set up the FFO in 1997. In seeking out multiple local grain mills made it difficult to ensure ways to improve nutrition in China, FFO officers that iron fortification could be both available and studied food fortification programs from locations consistently administered nationwide, especially in as diverse as the Philippines and the United States. rural areas where IDA was a problem. Meanwhile, a state-mandated reorganization in Instead, the CDC focused on soy sauce as China's 2002 gave the CDC responsibility for the prevention ideal fortification vehicle, even though other efforts 2 were also made in China to fortify flour as well. An from an IDA reduction of 30% in the Guizhou initial CDC survey of soy sauce production and township where the study took place would earn the consumption found that about 80% of the Chinese township an extra US$4.25 million over ten years. population consumed soy sauce, at an average daily On the basis of these results, China's Ministry of rate of 12.6 grams per person. Because soy sauce Health approved NaFeEDTA as a food fortificant in was a condiment rather than a staple food, over- 1999, and then approved NaFeEDTA for soy sauce consumption was unlikely. Unlike wheat and rice fortification in 2002. flour, soy sauce production was relatively central- ized. Centralization helped assure quality control. In addition, iron was more easily soluble in soy sauce Public­Private Collaboration: than in flour. A New Approach After tests comparing the effects of fortification According to former CDC leader Chen Chunming, with ferrous sulfate and fortification with sodium China had added iodine to salt since the early iron (NaFeEDTA, a highly absorbable combined 1990s, a task that was made easier to accomplish compound that separates into iron and EDTA in because salt production was already a government the body), the CDC settled on NaFeEDTA as its monopoly. Fortified soy sauce was another matter, fortification agent. NaFeEDTA did not alter the however. Chen Junshi said the program represented color, taste, or other properties of soy sauce. It also the first time that China's producers, distributors, promoted the absorption of iron already present in and retailers would collaborate in implementing a other elements of the meal and was not affected by public health program. several food iron inhibitors. NaFeEDTA was also nontoxic and stable in food vehicles and during The task was made more daunting by the fact that food preparation and storage. Most importantly, the CDC leaders were not sure how willing consumers body absorbed NaFeEDTA at nearly twice the effec- would be to adopt the new product. At issue were tive rate as it absorbed ferrous sulfate. not the health benefits of iron fortification, but the acceptability of state promotion of a privately Preliminary studies of children with IDA showed produced product. As former CDC leader Chen that three months of consuming iron-fortified Chunming recalled, "We began work in 1997, hold- soy sauce eliminated their anemia. A separate, ing discussion, workshops, and then applications. 18-month, randomized controlled trial of 14,000 We decided that this fortification program had people conducted in 2000 in impoverished Guizhou to be a voluntary, not mandatory, effort. People Province showed that consuming iron-fortified soy don't like forced compliance. Soy sauce is widely sauce resulted in a decrease in IDA exceeding 50% consumed, but China is an immature market, so in all age groups examined. Incidence of female IDA everything that's popular easily gets faked. For declined most, by over 70% among 19­30 year- this reason, government must ensure that samples olds. After one year of intervention, children who are genuine. Trust is key. Without common trust received iron fortified soy sauce had increased their there's no basis for cooperation." On the basis of weight relative to the control group by a statistically a CDC report, MOH vice minister Wang Longde significant margin. An academic paper estimated agreed that the voluntary approach of this program that the increased productivity that would result was appropriate. 3 But opposition to a collaborative approach was not Health and Commerce, the State Bureau of Indus- limited to the possible reaction from the cam- try and Commerce, and the State Commission of paign's target population. Reluctance existed within Development and Reform, in addition to the State the CDC as well. As FFO director Chen Junshi put Food and Drug Administration and the General it, "Nutritionists never do things like this." FFO Administration for Quality Supervision, Inspection, vice-director Sun Jing elaborated: "Attitudes within and Quarantine (AQSIQ). Making matters more the CDC varied. Some argued that, because the complex was the fact that each of these state enti- CDC system lacked broad administrative author- ties had its own offices at the national, provincial, ity, it was not the appropriate agent for this project. municipal, and county levels with which local CDC Others were afraid of being criticized for promot- offices would have to coordinate if the program de- ing commercial products, something they saw as signed in Beijing was to be successfully implemented. not being in the public interest. Others said we at the CDC should just do it ourselves, without work- The local CDC offices were asked to develop and ing with industry." roll out local promotional strategies, sometimes on the basis of ideas originating in Beijing, but typi- cally in response to local opportunities. The local Finding Public Sector Partners CDC offices were also responsible for developing local education about and awareness of IDA, and Yet the CDC had almost no power of its own to for testing blood hemoglobin levels. make things happen. The CDC was an MOH-affili- ated technical organization that could be mobilized to fight disease at the local level through its grass- Finding Private Sector Partners roots offices in each province. However, despite the name that they shared, the Beijing-based China Aside from needing to develop good working rela- CDC had no actual control over the local CDC of- tionships with public sector actors, the FFO team fices, which reported to the provincial health offices, also needed to define and approach potential part- not to the China CDC in Beijing. This meant that ners in the private sector. From the start, the CDC the China CDC relied upon the good offices of local team believed that it was important to partner both CDC representatives to collaborate and invest in the with soy sauce makers in China and with the mass iron fortification program. Only if the MOH issued media. Without manufacturers, there would be documents validating the program would local no product. Without the mass media, CDC efforts participation be assured. Similarly, the CDC relied stood little chance of reaching much of the popula- upon local health inspectors to carry out regular tion outside the specific pilot sites it selected. inspections of CDC-certified soy sauce manufactur- ers, though the health inspectors also reported to The CDC began by seeking out soy sauce mak- the department of health at the local level. ers willing and able to participate in the program. While the CDC was happy to educate the public Thus, China CDC's FFO was a small player within about IDA and the benefits of iron fortification, it China's public health structure, attempting to initi- would be up to the soy sauce industry to produce, ate a program that would touch multiple govern- distribute, and promote their own branded iron- ment bureaucracies, including the ministries of fortified soy sauce. To get the ball rolling, FFO scien- 4 tist Huo Junsheng approached the China Condi- Certification ment Association to solicit the industry association's support and to help guide the CDC's foray into the All soy sauce makers had to receive China CDC business world. As he explained: certification before they could participate in the program. China had over 2,000 soy sauce produc- We started out with the condiment association ers, but the China CDC certified only one or two in in order to identify good companies to work with. each of the seven provinces where its pilot efforts The condiment association gave us early visibil- were launched (see Exhibit 2 for a map of China). ity among producers. The industry was old and Interested soy sauce makers submitted an applica- traditional, so iron fortification was seen as a way tion to the CDC's FFO office, which passed it on to update the industry's image. Then I went to to the Chinese Condiment Association for review the provinces to visit companies. Some were very against nine criteria, though the CDC was willing to enthusiastic about participating. Two or three work with the firms to raise their standards to meet firms agreed to participate if the CDC gave them the certification criteria in cases where there was no some assistance. One famous firm didn't want to other plausible local producer. China CDC experts participate at all. Some were not willing to partici- together with soy sauce technologists would then pate because they felt they were doing just fine and visit the enterprises that received Condiment Asso- had no reason to go into fortified soy sauce. Their ciation approval to inspect the production facilities concern was that cooperation with the government and discuss iron fortification technology in greater would sooner or later lead to pressure to reward depth. On these visits CDC scientists often found the officials who had been of assistance. This is additional room for improvement, typically around a common problem in China, and many firms hygiene issues that constrained product quality. Few raised this as a concern. soy sauce manufacturers had invested in leading edge fermentation technologies or facilities, and Huo and others worked to educate the soy sauce CDC assistance in some instances led to substantive producers, explaining what the product was, how process and quality improvements. the technology worked, and what the benefits of offering it were. Said Huo, "We found that senior Once a soy sauce maker received CDC approval, executives needed to hear arguments not only China CDC experts would train the firm about the about the public health benefits of the program technology, about hygiene standards and hazard but the argument that producing iron-fortified soy analysis, including controls at critical points of sauce would make them money by expanding their production, and analytical methods for NaFeEDTA market. We told them that we would give them the in soy sauce. Producers were then obligated to fortification formula at no cost, train them how put in place and run a HACCP (hazard analysis to manufacture it, and give them free technical and critical control point) system for a period of support. In return we made them promise not to at least three months prior to an official site visit sell the fortified product at a mark-up over regular by CDC experts and the licensing of the iron- soy sauce." fortification logo for use by the firm. The HACCP system maintained food safety through hygiene standards, hazard analysis, and control of criti- cal points of the production process. License to 5 use the logo (see Exhibit 3) came at no cost, but grain, Zhenji was forced to manage rising input required annual renewal. costs with no ability to alter its prices. Although soy sauce prices eventually were freed over a year later, Typically, it took three to six months for the public expectations remained an informal source of China CDC to convince the CDC offices at the pressure to keep soy sauce prices low. provincial level to work with local companies, and another three months to one year to get the Many soy sauce manufacturers responded to companies interested in participating and certi- increased grain prices by reducing product quality. fied to do so. Most firms needed this time to raise Zhenji's CEO Zhang, however, insisted on maintain- their quality standards high enough to meet CDC ing quality, "even if we went bankrupt," according certification requirements. to one manager. "We did a lot of promotion, both through newspaper testimonials and through the condiment association, and we tried to educate the Shijiazhuang Zhenji Brew Group market." Zhenji lost money for a year, the manager Co. Ltd. said, but "we won the trust of consumers." Based in Hebei Province (surrounding Beijing), Zhenji also proved itself willing to invest in quality. Zhenji was established in 1956 as a state-owned While one way of minimizing the impact of rising enterprise with assets of 228 million yuan (US$28 grain prices was to diversify out of soy sauce (which million at 2006 rates). Fifty years on, Zhenji em- Zhenji did by developing its vinegar production ployed over 1,200 people and produced 80,000 tons capacity at this time), another was to convince con- of condiments annually, primarily soy sauce and sumers to pay a premium price for a premium prod- vinegar. Zhenji had 55% of Hebei's market for soy uct. Zhenji pursued this approach both through its sauce, and exported 10% of total production, partly marketing efforts and producing soy sauce with the under its own brand, partly as a contract manufac- leading available brewing technology. turer for others. The company had 16 subsidiaries and was one of the eight largest condiment produc- China's traditional method of making soy sauce ers in China. combined a loose mash of raw materials with a relatively low concentration of salt in a short fer- Zhenji customers fell into three segments: industry mentation period. By the late 1980s, however, the (to add soy flavoring to crackers, for example), res- leading technology was from Japan, and involved taurants, and retailers (for sales to individual con- fermenting raw materials in liquid state over a lon- sumers). Retailers generated significant profits, but ger period of time using a high concentration of salt. bulk sales to industry were more profitably because The Japanese method required significant invest- they saved on packaging and distribution costs. ment, however: Zhenji had assets worth only several Unusually for a Chinese state-owned enterprise, million yuan to pledge in collateral against the 20 Zhenji management had shown a willingness to million yuan it would need to purchase and install take hard choices. In 1994, for example, China al- the required equipment. Debate at Zhenji over the lowed grain prices to rise to market levels, without merits of taking the plunge versus sticking with the any change in the below-market retail price of soy existing set-up raged on for two years. In addition sauce. Because soy sauce was made from fermented to taking on significant new debt, upgrading to the 6 new system would slow Zhenji's cash flow signifi- Zhenji managers had many worries that made them cantly, constraining internal reserves and limiting hesitate over participation in the program. Among the company's room for maneuver in the face of other things, Zhenji managers feared that other soy any unexpected developments. Moreover, no other sauce firms would bring out their own fortified Chinese company was using the Japanese method. products to capitalize on Zhenji's own promo- Yet the process yielded the highest quality product, tion of fortified soy sauce. They worried that rural one that would bring higher margins than the soy consumers would balk at the price of their product, sauce Zhenji already made. CEO Zhang had set his even if they realized that it was beneficial to do so. heart on making Zhenji China's leading condiment The company would have to invest in marketing manufacturer, and argued that reaching this goal re- and distribution to the countryside, and would lose quired Zhenji to make the strategic choice to invest any benefits from doing so if no one bought the in the new method. In 1989, Zhenji installed the product. Managers also worried about the oppor- new production technology, increasing its annual tunity cost of sales that would be foregone if Zhenji capacity over time from 2,000 to 30,000 tons. At made the investment in an iron-fortified product the beginning of 2007, Zhenji remained the leading that fared poorly. Chinese manufacturer using this technology, which indeed became a major earnings driver for the firm. Ultimately, however, Zhenji managers elected to participate in the initiative, for several reasons aside Zhenji's focus on quality manifested itself in other from the benefits to public health. Zhenji manag- ways as well. During the 1990s, Zhenji was qualified ers concluded that fortified soy sauce presented as a kosher product, as meeting the global manufac- an opportunity to expand its market for soy sauce, turing quality standard ISO 9001, as having superior especially among anemics diagnosed by CDC clinics food safety controls, as a "green" food, and as a non- and events, and especially in rural areas where the transgenic food. Within China, Zhenji belonged to brand had little presence. They also concluded that drafting panels for national soy sauce, vinegar, and fortified soy sauce would allow Zhenji to take mar- blended condiment standards. Because of their ket share in rural areas from the nonbranded soy quality, Zhenji's soy sauce and vinegar in 2002 were sauce of low quality that was typically sold there. As exempted from inspection by AQSIQ. one manager noted, "We all know that consumers are unusually loyal to their brand of soy sauce. We don't know why, but this loyalty is stronger for soy Zhenji's Decision sauce than for many other products." Given this track record, Zhenji was a leading can- Given what was known about rural purchasing didate for CDC certification as Hebei's producer of patterns, the supply and promotion of fortified iron-fortified soy sauce. Over the years, moreover, soy sauce would give Zhenji a rare opportunity to Zhenji had collaborated with local health authori- penetrate the countryside and develop a new cus- ties on various issues, and was therefore comfort- tomer base. Rural consumers normally purchased able with being approached by the CDC. Despite unbranded soy sauce, not in individual bottles from this, and despite Zhang's track record of successful a store, but by bringing their own bottles from decision making, Zhenji managers debated for home to fill from the barrels of itinerant vendors. months whether to take part in the CDC program. The price for a half kilogram might be 0.30 yuan. 7 Unfortunately, such bulk sales left rural consum- ing vice president Hu Ping, strategist Guo Hongtao ers with soy sauce of unknown ­ but frequently to develop and market the fortified product. the poorest available ­ quality, often adulterated. Unbranded, store-bought soy sauce in bottle or bag packaging might cost a farmer triple that amount, "Two Wheels Turning" or 1 yuan, for the same volume, but was also often of low quality. To help create a cohesive and easily understandable mission statement from the various organizations More broadly, offering iron-fortified soy sauce was that worked with the CDC in some capacity, the a way to improve the Zhenji brand image among ex- CDC adopted a slogan suggested by its marketing isting consumers. Internally, it was a way to further consultant, Dong Shengli: "Two Wheels Turning upgrade product quality. Outside of Hebei, added a Together ()." This tagline empha- manager, iron fortified soy sauce created an oppor- sized the public-private partnership by making the tunity to expand into other urban markets. CDCs one wheel and the soy sauce manufacturers the other wheel. The CDC wheel turned toward Assuming that CDC efforts to raise consumer health the objective of alleviating malnutrition, while the awareness worked, Zhenji managers therefore manufacturers' goals increasing earnings. Although believed that significant market potential existed their goals differed, neither group could succeed for the product. They were happy to piggyback onto without the other. any public health efforts the government made in order to enhance the company's own reputa- Starting in 2002, China CDC launched iron-forti- tion. Managers appreciated that certification would fied soy sauce at 20 "sentinel sites" in six provinces ­ distinguish them from their local competitors. The Guangdong, Guangxi, Guizhou, Hebei, Jiangsu, managers also accepted CDC calculations that Jilin ­ and in Beijing. A total of 37 launch meetings increasing iron consumption with iron fortified soy were held in these locations to which all the local sauce was much cheaper than any other method. stakeholders were invited: representatives from For example, at 10 yuan to 20 yuan per year, iron commerce, education, industry, media, and the local fortified soy sauce was much cheaper than fresh manufacturers. The CDC hoped to certify at least meat, and was but a fraction of the 60 yuan annual one soy sauce producer in each province where it cost of medicinal iron tablets, to say nothing of the launched the program, but qualified producers were 600 annual cost of vitamin supplements. Thus, pro- not always available. duction of iron-fortified soy sauce gave Zhenji an opportunity to diversify its product portfolio into Within each province, local CDC officials began six new demographic segments. months of project training. This included training of health care providers, social marketing within Because Zhang had been involved with China the soy sauce industry, and quality control training CDC's venture from its beginnings in 1997 ­ he courses at the certified suppliers. Once the CDC had had participated in the international conference in its local teams in place, they set about organizing Beijing that had settled on soy sauce as the forti- awareness events and developing and disseminating fication vehicle of choice ­ Zhenji formed a team information about iron deficiency, and holding on comprising Zhang, vice-CEO Wang Ergang, market- the street testing for anemia. 8 Local CDC teams also enlisted the local mass Zhenji's Results media to assist in the dissemination of articles and information about iron deficiency, IDA, and the Zhenji became the only manufacturer in Hebei iron fortification program. As FFO vice-director Province that China CDC certified to produce Sun Jing pointed out, "We developed articles and iron-fortified soy sauce, which it made available in other materials, but the real benefit was having concert with the CDC's pilot program for Hebei in the CDC featured on the news. That was coverage 2002. Yet the product flopped. Demand for iron- we didn't have to pay for. Luckily, media people fortified soy sauce almost entirely reflected the were quite sympathetic to our efforts and tried to degree of promotion the company was devoting to help spread the word about what we were do- the product. ing. In some cases, local reporters were tested and surprised to discover that they themselves were Ironically, noted Zhenji managers, "We found that anemic, and therefore worked even harder to help when we offered both fortified and regular soy sauce, spread our message." The CDC effort made the consumers rejected the fortified soy sauce. Appar- news not only on local television programming, ently they were skeptical that the product could but even on the national CCTV channel, as well as contain something extra without a price increase, so in local newspapers and radio programs on health we went ahead with a price increase for the fortified topics. Most of the content was prepared by China product to overcome consumer skepticism." But CDC in Beijing and distributed to the local CDC China CDC officials warned them to keep the price teams on site. The CDC also set up a website (www. gap between the products low. Said Sun Jing, "High cdc-ffo.cn), and got its message out through web prices lead to the emergence of fake product." kiosks in Beijing. Within other urban sentinel sites, local CDC teams advertised the campaign with placards on the sides and interiors of busses, as Project Results well as in the display cases typically set out along neighborhood streets to display official notices As 2003 drew to a close, results from the pilot pro- and news announcements. In addition, CDC grams were rolling in, and the CDC had good news teams held consultations and made presentations to report. Beginning with the baseline surveys local to target audiences by appearing before womens' CDC teams had undertaken in 2002, twelve of the groups and at schools, where banners and wall sentinel sites had reported the results of one-year slogans were prominently displayed. CDC teams follow-up surveys, and three had reported two-year also distributed posters, leaflets, and brochures in follow-up surveys. retail establishments that stocked iron-fortified soy sauce (see Exhibit 4). To access rural consumers, · Awareness ­ Awareness of iron deficiency and local CDC teams painted brick walls along country IDA was up sharply in all seven provinces, roads with slogans, and persuaded local villages to from baseline awareness rates of between 2% show short educational clips at the start of movies and 26% (the latter for Beijing), to results that were projected outdoors to the public. ranging between 66% to 80% of the at-risk population after one year, and 90% to 99% at the end of two years. 9 · Coverage ­ Iron-fortified soy sauce was avail- commercial returns from promotion, and consumer able at all of the retail outlets within each senti- skepticism about the health claims Zhenji made for nel site community, and at 60­70% of regional its products. outlets and 30% of provincial supermarkets and convenience stores. To begin with, Zhenji managers worried that they · IDA Alleviation ­ As a result, the anemia rate had seriously overestimated the size of their poten- in women declined from baseline rates of tial new market. Zhenji's iron fortified soy sauce was between 17% and 50% (the former for Beijing) available in the consumer marketplace starting in to between 15% and 40% after one year, and to August 2002, but sales were poor in the absence of 23% in sites reporting results after two years. promotion efforts. Zhenji managers focused their concern on poor rural sales. Said one, "Rural percep- After two years of effort, China CDC data showed tions of healthcare and the importance of nutrition that 58.6 million residents (of a total population of are poorly developed because the farmers are more some 300 million) of the seven provinces and Bei- concerned about getting enough to eat rather than jing were using iron-fortified soy sauce, including the nutritional quality of their food." Moreover, 34.5 million individuals at risk for iron deficiency. Zhenji managers said, iron deficiency was a hidden China CDC had certified twenty of a total of 69 problem, with no clear or acute symptoms. Most applicant companies to produce iron-fortified soy IDA suffers thought they were just fine. Reported sauce. Even so, noted Huo, "Despite the clear evi- another Zhenji manager, "Even if they consumed a dence from our studies, some producers still believe bottle of fortified soy sauce, they might not no- that making iron fortified soy sauce is a bad idea." tice the benefits right away." Farmers also had low incomes, making them unwilling to pay more to purchase packaged soy sauce, added another. Urban An Unexpected Challenge consumers had more ways to consume iron than for- tified soy sauce: they could eat meat, take iron tablets, In October 2003, China CDC received a US$3 mil- or general supplements including iron, and they lion grant from the Global Alliance for Improved tended to have incomes that allowed them to do so. Nutrition (GAIN) to support health education and social marketing of the iron-fortification campaign Zhenji's results to date also called into question the over the 2003­08 period. Overhead would be mini- value of continued marketing efforts. Although mal: CDC salaries were paid by the government, experience had shown a direct link between Zhenji's and industry matched the funding in kind and with promotions and consumer purchases, the returns some small contributions. on Zhenji's marketing expense were too low. Zhenji managers did not know how to sustain sales once Although this was thrilling news for the FFO staff promotional campaigns ended. They concluded in Beijing's CDC, Chen Junshi had just received that nothing justified continuing investment in a sobering news in his phone call to Zhenji's Zhang program with lower returns than those from other Lin. On the basis of its experience with the CDC Zhenji products. initiative, Zhenji managers now objected to further participation in the program. The objections fell Finally, Zhenji managers noted that urban con- into three categories: potential market size, the low sumers were fed up with exaggerated claims from 10 vitamin companies about the benefits of their products. As a result, consumers tended to disbe- lieve all advertised health and nutrition claims that producers made, including Zhenji's. Iron pack- aged with herbal extracts was already sold at high prices, but the perceived benefits did not match the claims for the product, or its high price, and Zhenji managers didn't see how they could do anything to overcome this. Chen wondered what had gone wrong. There was obviously much left to be done if he was to reach the CDC's national target of supplying 30% of the national population with iron-fortified soy sauce. Surely there was no lack of passion and effort from the FFO team. Chen saw from a glance at vice- director Sun's empty chair that she was on the road in support of local campaigns promoting iron-for- tified soy sauce. Indeed, over the previous year Sun had traveled so much that she had not been able to spend a single week in the Beijing office without a scheduled trip out of town. Yet Zhenji's experience demonstrated that the program needed to overcome some important challenges. No vehicle could hope to move forward if it lost one of its wheels. 11 Exhibit 1. Iron Deficiency and Anemia The human body needs iron primarily to form Iron deficiency and IDA were the most common hemoglobin, the protein in red blood cells respon- diseases associated with poor nutrition, and each sible for binding oxygen for transport from the was of particular concern in developing countries. lungs to the body's tissues, where it is used by the Southeast Asia and Africa were worst affected; body's cells to generate energy. Humans obtained a 1992 WHO study estimated the prevalence of iron from their diet, though absorption was limited anemia among pregnant women in Southeast Asia to about 1mg for every 10mg to 20mg of iron and Africa at 74% and 52% respectively. A diet low ingested. Growth spurts or pregnancy and lactation in iron was the leading but not only cause of IDA. boosted iron needs, making women and children Hookworm ­ which affected an estimated one particularly susceptible to the effects of iron defi- billion people worldwide ­ and other sources of ciency. Symptoms of iron-deficiency anemia (IDA) internal bleeding caused many additional cases. included abnormal paleness or lack of color of the skin, irritability, low energy and fatigue, elevated heart rate, sore or swollen tongue, enlarged spleen, and a desire to eat peculiar substances such as dirt or ice (a condition called pica). 12 Exhibit 2. Location of Iron-fortified Soy Sauce Pilot Programs, by Province, end 2003 Exhibit 3. Iron Fortification Logo Fe ­ the chemical symbol for iron ­the Chinese character for iron Upper caption: Chinese Center for Disease Control and Prevention Lower caption: China Condiment Association Source: CDC, FFO. 13 Exhibit 4. Sample Artwork from CDC Promotions Upper caption: "When you have `iron', you have strength" Lower caption: "When you eat soy sauce, be sure to use the `iron' kind" Source: CDC, FFO. 14