Dairy industry moves to rebrand amid crisis

BEIJING - China's dairy industry is attempting to rebrand itself due to plummeting consumer confidence and competition from foreign brands.

Chinese consumers have been purchasing increasing amounts of milk powder from foreign countries due to decreased confidence in domestic brands caused by a 2008 food safety scandal.

Several countries, including Australia, New Zealand and Germany, have introduced quota measures to cope with China's growing demand for milk powder, the Shanghai Securities News reported.

Dairy industry expert Wang Dingmian attributed the increased foreign purchases to lower prices and weakened confidence in the domestic dairy industry.

The industry lost consumers' trust after the Sanlu Group was found to have adulterated its infant formula with melamine, a chemical compound used to create plastic, in 2008. Six children died from drinking the milk, while 300,000 were sickened.

The Sanlu Group subsequently went bankrupt. The profits of other Chinese dairy companies suffered greatly in 2008.

Wang said the industry must rebuild consumer confidence before it can be revived.

With confidence in domestic companies flagging, foreign companies have moved to fill the void, with 100 foreign dairy brands entering the Chinese market in 2009.