China’s baby milk sec­tor is still try­ing to re­cover from a loss of con­fi­dence caused by a safety scan­dal 10 years ago, as Li Hongyang re­ports.

China Daily (Canada) - - CHINA -

The gov­ern­ment’s cam­paign to reg­u­late the baby for­mula milk in­dus­try and re­store con­sumer con­fi­dence which was badly dam­aged by a scan­dal in 2008 has seen nearly 50 per­cent of prod­uct cat­e­gories elim­i­nated from the mar­ket in the past two years.

The sale of newly made un­reg­is­tered prod­ucts was banned from Jan 1, un­der a reg­u­la­tion re­leased by the China Food and Drug Ad­min­is­tra­tion in June 2016. How­ever, ex­ist­ing stock can be sold un­til it reaches its ex­pi­ra­tion date.

Now, qual­i­fied com­pa­nies, ir­re­spec­tive of whether they are do­mes­tic or for­eign, are al­lowed to reg­is­ter three brands with three age cat­e­gories, re­sult­ing in nine prod­ucts each in to­tal.

Sales of milk for­mula have risen rapidly since 2015, when the Chi­nese mar­ket ac­counted for 43 per­cent of global sales, and will con­tinue to rise un­til at least 2020, ac­cord­ing to mar­ket re­searcher Euromon­i­tor In­ter­na­tional.

Mean­while, the Qianzhan In­dus­try Re­search In­sti­tute, an in­de­pen­dent think tank in Bei­jing, said sales reached 73 bil­lion yuan ($11.5 bil­lion) in 2015.

The CFDA’s web­site said the reg­u­la­tion is in­tended to re­duce the num­ber of for­mu­las that are sim­i­lar but claim to have dif­fer­ent func­tions, and also force un­reg­u­lated com­pa­nies whose prod­ucts are made by a third party out of the mar­ket.

In 2016, an es­ti­mated 2,000 for­mu­las made by 103 do­mes­tic com­pa­nies were avail­able in the Chi­nese mar­ket, but by the end of last year, the num­ber had fallen to 743 prod­ucts from 93 com­pa­nies reg­is­tered with the CFDA.

In ad­di­tion, there were 209 for­mu­las made over­seas by 37 reg­is­tered for­eign man­u­fac­tur­ers, ac­cord­ing to the ad­min­is­tra­tion’s me­dia and pub­lic­ity of­fice.

Song Liang, an in­de­pen­dent dairy ex­pert, said the reg­u­la­tion has raised the bar for China’s for­mula milk in­dus­try be­cause it will elim­i­nate a num­ber of smaller brands and un­reg­is­tered man­u­fac­tur­ers, which will force larger com­pa­nies such as Feihe In­ter­na­tional Inc, Yili Group and Be­ing­mate Baby & Child Food Co to fo­cus more on prod­uct re­search and brand rep­u­ta­tion.

“This will help the gov­ern­ment to tighten its con­trol of the in­dus­try and boost con­sumer con­fi­dence in lo­cal brands,” he said.

In 2008, pub­lic con­fi­dence was se­verely dam­aged when six chil­dren died af­ter drink­ing in­fant for­mula made by Sanlu Group in He­bei prov­ince that had been tainted with Me­lamine, a com­pound used in the pro­duc­tion of plas­tics. Ac­cord­ing to China’s health au­thor­ity, about 54,000 ba­bies were hos­pi­tal­ized.

Since then, many par­ents have used for­eign-made for­mu­las, which they either buy on­line or ac­quire from rel­a­tives and stu­dents liv­ing over­seas.

A 2013 poll con­ducted by Sohu, an on­line news por­tal, showed that 89.54 per­cent of the 15,870 re­spon­dents chose for­mu­las made over­seas.

Zhang, a 25-year-old mother in Bei­jing who pre­ferred not to give her full name, said she has never con­sid­ered giv­ing her baby Chi­ne­se­for­mula.

“When I was preg­nant, I started do­ing re­search on an app called Baby Tree. Then I dis­cov­ered Meitun, a trust­wor­thy cross-bor­der e-com­merce plat­form, and bought Ger­manAp­tamil for my son, who is now age 1. Af­ter about two months, he adapted to the for­mula well,” she said.

“I have con­fi­dence in lo­cally made prod­ucts such as mo­bile phones or cars, but not for­mula, which is my baby’s main food. No mother can risk her baby’s health on brands with­out strong rep­u­ta­tions.”

Dai Mei­juan, a mother in Changchun, Jilin prov­ince, also gave her daugh­ter Ap­tamil, but the child didn’t like it, so she changed to Nutrilon, made in the Nether­lands.

“I don’t com­pletely un­der­stand the English in­struc­tions on the pack­ag­ing, but for­eign brands are al­ways con­sid­ered bet­ter than lo­cal ones. I don’t know why, it’s just a kind of pref­er­ence even though I know some lo­cal brands are fine,” she said.

How­ever, the large num­ber of par­ents look­ing to buy for­mula from over­seas has re­sulted in some for­eign store chains tak­ing mea­sures to limit pur­chases.

Zhang Xin, who stud­ies in Aus­tralia, be­gan pur­chas­ing for­mula for friends in China two years ago. She said Wool­worths, an in­ter­na­tional re­tail chain, im­posed a limit of two units per cus­tomer per pur­chase last year.

More­over, the for­mu­las, es­pe­cially Ap­tamil and A2, are not usu­ally avail­able on the shelf, which means cus­tomers have to ask an as­sis­tant for the prod­uct.

Song, the in­de­pen­dent ex­pert, con­ceded that chang­ing pub­lic per­cep­tions of Chi­nese-made for­mu­las will be a long-term task.

“It will take quite a long time for us to see the ef­fects of the reg­u­la­tion, but it lays the foun­da­tion for the in­dus­try’s im­age in the fu­ture and tar­gets the at­ti­tudes of fu­ture par­ents. Over­seas brands are usu­ally cheaper and have bet­ter rep­u­ta­tions, but lo­cal brands are catch­ing up,” he said, re­fer­ring to the in­ef­fi­cient tech­niques and ma­chin­ery that re­sult in higher pro­duc­tion costs for do­mes­ti­cally made for­mula and push prices higher.

Mao Xuey­ing, a pro­fes­sor of food science and nu­tri­tional en­gi­neer­ing at China Agri­cul­tural Univer­sity in Bei­jing, said: “The right one is the best one. Peo­ple’s di­etary struc­tures vary from na­tion to na­tion. So the prob­lem is that over­seas for­mula may lack cer­tain nu­tri­tional com­po­nents or even con­tain too many. For ex­am­ple, a lack of io­dine in some over­seas for­mu­las may present prob­lems for ba­bies in China.”

Ling, a for­mer em­ployee of Fon­terra, a nu­tri­tion com­pany in New Zealand that was a ma­jor share­holder in Sanlu dur­ing the 2008 scan­dal, said Chi­nese-made for­mu­las are now high-qual­ity prod­ucts.

“Ev­ery dairy in­dus­try in­sider knows that a decade has passed since the scan­dal and now the stan­dards of both for­mula man­u­fac­ture and in­spec­tion in China could not be higher. But that’s of lit­tle im­por­tance be­cause it is the con­sumers who should know this and rec­og­nize the prod­ucts. To re­store con­fi­dence, au­thor­i­ta­tive in­ter­na­tional third-party in­spec­tors should be in­tro­duced into the na­tion’s for­mula mar­ket. Boast­ing about our own for­mu­las won’t do the trick,” said Ling, who pre­ferred to only give her sur­name.

James Tong, chair­man of the

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