China Probes Foreign Infant Formula Makers

Bloomberg News reports that China has opened investigations into foreign milk-powder companies, including Danone and Nestle, for pricing and anti-monopoly violations:

The National Development and Reform Commission, the country’s top economic planning agency, started an investigation into the pricing of infant formula sold by companies also including Mead Johnson Nutrition Co. (MJN), Abbott Laboratories (ABT), Dutch producer Royal FrieslandCampina NV, and local firm Biostime International Holdings Ltd. (1112), the newspaper reported today.

The NDRC has evidence the companies sold products at high prices in China and their pricing increased about 30 percent since 2008, according to today’s report, which cited the agency. Safety scares such as a melamine-tainted milk powder scandal in 2008 which killed at least six infants have increased Chinese consumers’ distrust of local milk and driven up their purchases of foreign brands at home and overseas.

“Prices of milk powder, particularly from foreign brands, have gone up because of the far greater trust Chinese consumers have in the brands,” said James Roy, an analyst at China Market Research Group. “Chinese consumers see the higher price point partly as an assurance of the product safety.”

The agency didn’t immediately respond to a fax seeking comment on its investigation. [Source]

Mead Johnson, Wyeth, Dumex and Frisco all confirmed the probe, according to Caijing, and a Danone spokeswoman told the South China Morning Post that Danone was “fully cooperating with the authorities.” Nestle also said it was cooperating. China has stepped up its efforts to regulate and monitor the market for baby formula, after battling persistent safety issues with domestic producers since 2008. In April, authorities in Hong Kong seized more than HK$1 million worth of infant formula in connection with an illegal trading ring.

Amid the mistrust of domestic infant powder, The Wall Street Journal reports that demand for foreign formula has soared:

Chinese mother Chen Fang says she spends as much as 380 yuan for a can of foreign formula for her 17-month-old daughter. “I have never considered domestically made milk powders,” Ms. Chen said. She buys imports from Biostime and is considering switching to Friso, a brand from FrieslandCampina, she said.

Nervousness about the quality of China-made formula has led to officials and retailers in Hong Kong, Australia, the U.K. and elsewhere to restrict purchases to keep Chinese tourists from sweeping formula off the shelves. China in recent years has developed a brisk black market in smuggled baby formula, though precise figures are hard to come by. [Source]

Chris Luo of the South China Morning Post, meanwhile, notes a report that some adults in Shenzhen have turned to human breast milk for their own nutrition:

Increasing numbers of adults have been hiring wet nurses so they can consume breast milk for its nutritional value, Lin Jun, a manager of Xinxinyu Household Service Company in the southern city of Guangdong, told the Southern Metropolis Daily. Lin went on to say that his company is promoting and expanding its breast milk supply business from babies to adults, the newspaper reported on Tuesday.

“Clients can choose to consume breast milk directly through breastfeeding … but they can always drink it from a breast pump if they feel uncomfortable,” the paper quoted Lin as saying. He claimed breast milk was now popular among adults with high incomes and high-pressure jobs and who suffered from poor health.

“Quite a few of our clients hire in-house wet nurses to ensure a supply of fresh breast milk on a daily base,” Lin said in the report, adding “wet nurses rarely raise objections as long as the price is right.”

A spokesperson for the company who refused to be identified on Tuesday claimed the report was entirely false, insisting his company’s household services did not include recommending wet nurses. The allegations were malicious gossip aimed at driving his company out of business, he told the South China Morning Post by phone. [Source]