Survivor leads China’s milk industry
According to the 21st Century Economic Report dated Nov. 3, deals had been reached for Sanyuan to purchase seven Sanlu core factories. Sanyuan appeared triumphant in the bargaining. Sanyuan might issue additional targeted shares and apply for a state loan to complete the acquisition.
The same report said WonderSun, a dairy producer based in northeast China’s Heilongjiang province, was to take over a Sanlu milk powder factory in Mudanjiang. However, WonderSun had repeatedly denied the intention and the acquisition.
This was not the end of the Sanlu story. Rapidly expanding through investments, acquisitions and mergers, Sanlu had lined up nearly 30 factories under its name. Earlier, on Oct. 28 it was reported that seven non-core Sanlu factories had changed names and resumed operation. The fate of the remaining enterprises was yet to be decided.
The melamine scandal caused more casualties than just the Sanlu Group. A report from the government of Inner Mongolia in north China showed the region’s two leading milk producers, Mengniu and Yili, had recalled melamine related products worth 6.4 billion yuan. Orders decreased 80 percent, daily collection of raw milk dropped by similar rates and the future loss was estimated to be 3.6 billion yuan.
Statistics released by the Ministry of Industry and Information Technology showed, up to Nov. 2, 128 of the 638 dairy producers in China remained closed.
Although a survivor of the melamine scandal, Sanyuan Foods general manager Niu Liping said the company shared the pains, because the whole industry was damaged. “With the skin gone, what can the hair adhere to,” he said. Niu said he was worried over the future of the domestic milk industry.
He did not believe there had been an unwritten rule relating to melamine dealing in the industry. With companies like Mengniu and Yili, he said, most of their products were still safe and good. He called on fellow companies to learn from the lesson. And he pleaded with consumers to retain confidence in domestic products. “It would take time for the dairy industry to overcome the difficulty,” he said.
On another occasion amid the furore about the scandal, Zhang Fuping, board chairman of Sanyuan Group, which was Sanyuan Foods’ parent company, was quoted as saying, “As a state owned enterprise, we have an unshakable responsibility to lead the industry to disciplined development and let consumers drink milk that is good for their health.”
Tags: dairy, industry, milk