Chinese authorities have opened an investigation into an alleged cartel in the baby milk formula market. Consumption of baby milk formula in China is currently experiencing tumultuous expansion in a segment which for a number of reasons (see GIFT article) is dominated by foreign brands. Since the 2008 melamine milk scandal, consumers in the People’s Republic are increasingly looking abroad. In addition to the aforementioned companies, two American firms, Mead Johnson and Abbott have been the object of direct scrutiny. Though the results have not yet been released, Wyeth Nutrition (acquired last year by Nestlé) and Dumex (a Danone subsidiary) have announced price reductions from 2014. China is hoping to boost local production by rationalising its product offers. An example can be drawn from the case of China Mengniu Dairy, which had been accused of selling contaminated milk, that today is consolidating itself as the national leader, absorbing smaller competitors and sealing partnerships with European players to increase safety and quality standards.
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