Does China Require Goat Infant Formula Manufacturers To Label Lactose Origin?

On August 15, 2019, Blue Orca, a short selling investment firm, published its opinions on Ausnutria Dairy Corp Ltd claiming that Ausnutria inflates revenues, hides costs, misleads Chinese consumers, etc. Blue Orca also claimed Ausnutria's goat infant formula used incompliant labeling, specifically its labeling of lactose. However, according to SAMR officials from the Center for Food evaluation, it is not required to indicate the source of lactose.

On August 15, 2019, Blue Orca, an activist investment firm, published its investment opinion ^[1] on Ausnutria Dairy Corp Ltd detailing an extensive investigation which indicated that Ausnutria inflates revenues, hides costs, misleads Chinese consumers, etc.

After checking the response from Ausnutria ^[2], on August 19th, 2019, Blue Orca published a second report ^[3] further questioning Ausnutria's market performance and calling into question the legality of Kabrita's recipe (note: Kabrita is Ausnutria's goat infant formula brand). In the 2nd report, Blue Orca stated that under Chinese law Ausnutria should declare that Kabrita contains lactose from cows, as required by Article 31, Administrative Measures for Registration of Infant and Young Children Milk Powder Formula Recipes (Chinese version; ChemLinked E-translation ^[4]).

Source: Blue Orca report

However, the Blue Orca translation and interpretation of Article 31 is technically inaccurate. Under article 31, raw milk, milk powder and whey (protein) powder shall clearly indicate origin, but lactose does not require origin labeling. Although the character "等" is used after giving several examples, which can be translated into "etc." in English. In Chinese the character "等" can also be meaningless as is the case in this example. This usage is often seen in official documents. (Example: MOFCOM announced 37 CBEC pilot cities ^[5])

Besides, SAMR has also previously replied to this question. Here's the interpretation of article 31. (Source from Center for Food Evaluation, SAMR ^[6])

If you claim the product as goat infant formula, then the raw milk and milk powder shall be totally from the goat.
If the raw milk or milk powder comes from more than two animal sources, it shall not be labeled as goat infant formula.
Whey (protein) powder shall indicate the proportion of raw materials of various animal origins.
No need to label the animal origin of lactose.

So in terms of Kabrita's labeling, Ausnutria is fully compliant with Chinese requirements.