A question of trust for tainted dairy industry
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E-mail Shanghai Daily, July 23, 2013
Gao Fu, an inspector with the consumer goods division of the Ministry of Industry and Information Technology, told an industry forum late last month that domestic companies account for only 20 percent to 25 percent of high-end infant powder sold in China. Only three companies among 127 producers had an annual production capacity of 30,000 tons or more.
The crowded field of players hasn't stopped new entries into a high-margin business. Neolac (Shanghai) Nutrition Co, a unit of Dutch-based Hyproca Dairy Products BV, is one of the latest to join.
David Zhu, the company's general manager, says he is confident that industry consolidation efforts will bring more order to the industry.
Under a government blueprint, China will gradually eliminate outdated or inefficient infant formula makers within two years and create 10 leading milk powder companies, each with annual revenue of more than 2 billion yuan (US$326 million).
Yashili International Holdings, the Hong Kong-listed arm of Guangdong Yashili Group, was China's top milk powder producer last year, with infant formula sales of about 3 billion yuan.
Public concerns
The domestic milk powder industry is trying to regain public confidence, but it's still unclear if consolidation, price cuts and improved product quality surveillance will achieve that end.
Chinese consumers, after a series of food-contamination and price scandals, have become wary and the government is under pressure to show that it is addressing public concerns.
Skullduggery is not confined to the milk powder industry.
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