Having lived in China for 10 years the food contamination issues are no surprise and are linked to the endemic corruption that exists at many levels in Chinese business and industry. Making money is more important than safety. Local Govt officials are easily paid off.
The reason that this has become so big is that more and more production of what were once western brands is being done in China. Yes you can have joint ventures with an SOE (state owned enterprise) but though on paper you might have a 52% stake it is impossible to control. The Chinese partner can ensure that the foreigner is kept in the dark. Pretty easy to do as most foreign managers do not speak Chinese. Per se quality reporting issues can be kept hidden.
The Chinese press is state owned and controlled, so if they want to supress a story or investigation it can be easily done.
It will be interesting to see how the Boys in Beijing handle this one.