We blame bad regs for China's melamine myopia. This isn't the problem. China lags centuries behind the West when it comes to corporate governance.
With Wall Street in full melt down, it's easy to forget that most American companies are governed pretty well -- meaning, they, by and large, don't poison their customers. Why? Because 400 years of corporation law in the West have made transparency and good governance mandatory, punishable by fine and imprisonment.
Capitalism is 25 years old in China. Most Chinese companies are totally opaque, and engineers are often penalized for stopping the assembly line if there's a quality control problem.
Better regs can't fix this. Only acculturation can.