Friday, July 2, 2010


The incidence of Melamine tainting of milk based baby foods in China resulting in several deaths and debilitation of a number of children has not yet faded from the memory of many families affected by this unfortunate episode. No doubt recovery from such a set back to the credibility of Chinese food industry called for taking many confidence building measures by the government as well as the industry. One of the far reaching measures taken by the government was to set up more stringent enforcement infrastructure to preempt recurrence of such incidences. While the above episode caused a steep fall in demand for dairy products from the local manufacturers, it provided an opportunity for some multinational companies (MNCs) to expand their business.

"Chinese dairy product industry, suffered from the doubles blows, however, did not cut down as a whole. There were many reasons for that. On the one hand, the demands for dairy products were irreplaceable for Chinese students, the olds and babies etc. Meanwhile, the occurrence of melamine event made Chinese consumers doubt the national dairy products, but the enterprises took different measures to reverse the consumers` confidence. Also, some regional enterprises began to construct or expand so as to occupy the market. The foreign funded enterprises intensified their distribution in Chinese market. Nestlé, Danone and so on, quickened their expansions in Chinese dairy product market. Some foreign funded enterprises in other food industry began to entered Chinese dairy product market. The market blank was quickly filled by Chinese regional dairy enterprises and foreign funded enterprises".

With stringent deterrent measures against adulteration put in place, it may be a question of time before locally made products recapture the lost market as they have distinct advantages in terms of reduced production cost and familiarity with the consumers and the market needs. MNCs, after all, have to depend on local sources of milk for value addition which is a distinct disadvantage and engaging in importation may not be a viable option in the long run.


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