by winston » Tue Sep 23, 2008 9:01 am
China Mengniu Dairy Boosts Milk Tests, Faces `Critical Moment'
By Kelvin Wong
Sept. 23 (Bloomberg) -- China Mengniu Dairy Co., the country's largest producer of liquid milk, said it's boosting quality standards and facing a ``critical moment'' after tainted Chinese-produced milk sickened almost 53,000 children.
Mengniu has carried out tests on ``each and every lot'' of raw milk sourced since the scandal broke and on final products to check for the chemical melamine, it said in a Hong Kong stock exchange statement late yesterday. The company's shares will resume trading today, it added.
Tainted milk has led to the deaths of four infants, triggering the replacement of China's chief quality supervisor and causing countries from Asia to Africa to curb sales of Chinese dairy products. Premier Wen Jiabao ordered an overhaul of the industry after goods made by 22 companies including Mengniu were found to contain melamine.
``The board wishes to sincerely apologize for the incident and any inconvenience caused to the public,'' Mengniu said in the statement. ``The board and the management believe that this critical moment for both the industry and the group has to be managed in a proactive manner.''
The company also pledged to pay compensation double the statutory amount due under Chinese law to anyone diagnosed as becoming ill as a result of consuming tainted goods within the next five years.
Product Recall
Mengniu has recalled the products linked to melamine, all of which were only for distribution and sale within China, according to the statement. The tainted goods represent ``a small percentage'' of Mengniu's range, it added.
Starbucks Corp. said on Sept. 19 that its Chinese outlets would use soy milk instead of products from Mengniu because of the scandal.
To improve standards, the dairy company is sending managers out across the country to help local distributors boost inspections. Mengniu will also only work with suppliers that have consistently passed quality tests, it said. The Hong Kong- based company is also conducting a full review of its production processes and drawing up plans to improve communications.
Mengniu last traded in Hong Kong on Sept. 17 at HK$20. The stock has lost 30 percent this year.
Li Changjiang resigned after seven years as chief of the General Administration of Quality Supervision, Inspection and Quarantine, the official Xinhua News Agency said yesterday. Wang Yong, former secretary-general of the State Council, China's cabinet, replaced him, the news agency said.
Melamine, used to make plastics and tan leather, can disguise the fact that milk has been diluted by increasing the apparent protein content. Companies in the dairy industry didn't check for the chemical before the scandal broke, Mengniu said.
Melamine-tainted milk has been linked to the hospitalization of 12,892 infants and the sickening of another 39,965 babies as of yesterday.
It's all about "how much you made when you were right" & "how little you lost when you were wrong"