A decade after scandal, China’s dairy industry regains public trust

“Domestically produced milk is always fresher than imported, which is the most important thing for me in choosing a diary product,” said Shang, a resident of Wuhu City in central China’s Hunan Province.

Like Shang, a growing number of Chinese customers are now buying domestic dairy products without having to worry about their quality, indicating the dairy industry’s recovery from the infamous safety scandal 10 years ago.

In 2008, infant formula produced by Sanlu Group, then a leading dairy company, was found to contain melamine, killing six babies and leaving thousands seriously ill.

Since then, more cases have been discovered, plunging the industry into a years-long crisis and prompting Chinese consumers to turn to overseas milk products.

To revive the battered industry, Chinese authorities passed strict laws, tightened supervision, shut down unqualified dairy operations, encouraged industry consolidation, and increased policy support to improve milk quality.

Thanks to those measures, quality has improved greatly and the industry has expanded.

A report jointly released by the Dairy Association of China and the Ministry of Agriculture said the quality of domestic dairy products continued to improve in 2017, with 99.8 percent of fresh milk and 99.5 percent of dairy products-checked up to standard.

Xiujuan, a young mother from northern China’s Hohhot City, has been feeding her son with domestic formula for nearly three years, and he is growing up healthily.

She had tried to feed her baby with foreign formula, but her son did not like the taste, forcing her to switch back to domestic brands.

“The quality of domestic dairy products can now be guaranteed, and they are fresher and cheaper than imported ones,” Xiujuan said.

Outside the domestic market, Chinese dairy producers are even winning over overseas customers as they take steps to adapt to international quality standards while seeking global partnership.

In a 2017 list published by Dutch banking and finance group Rabobank, Chinese dairy giants Yili Group and Mengniu Diary were ranked among the world’s top 10 dairy companies, and are expected to further explore the overseas market for future growth.

Both companies have enjoyed a stronger global presence with a steady upswing in market share outside China, with the establishment of plants in major diary countries such as Australia and New Zealand.

In the first half of 2017, Mengniu Dairy said its sales overseas had surged more than 40 percent year on year, compared with an 8.1 percent rise in overall sales. The company now holds the second largest dairy market share in Hong Kong and the third largest in Singapore.

The fast-expanding market dominance is only part of Chinese dairy producers’ rising global reputation. Domestic producers like Modern Farming and Feihe Dairy Industry have won gold awards at the prestigious Brussels-based Monde Selection, which judges food quality.

To ensure product quality, Chinese regulators currently set more than 200 industrial standards for dairy products, and they are pushing for further consistency between domestic and international standards, according to a Dairy Association of China report.

At official spot checks, some major indicators, including nutrient content, exceeded the standards of the United States, Europe and Australia, according to the report.

 

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