Credibility costs Chinese firms $92b annually

Updated: 2011-07-17 19:58

(Xinhua)

BEIJING - Chinese enterprises lose up to 600 billion yuan ($92 billion) every year due to a lack of business credibility, according to official data.

About 200 billion yuan, or one third of the loss, was a result of consumers' lack of trust in product quality as data with the Ministry of Commerce shows, said Wang Zhongyu, president of China Enterprise Confederation, at a forum in Beijing on Sunday.

Food scandals in recent years indicated that a lack of business ethics had caused the problem, said Wang.

The bankrupt Sanlu Group, which was at the center of tainted-milk scandal, and other dairy companies set up a 1.11-billion-yuan compensation fund after it was revealed that the companies used milk that contained melamine to produce baby formula.

Wang called on enterprises to promote and maintain good ethics and establish effective supervision mechanisms to avoid wrongdoing.