Premier Li Calls for Safe Infant Formula

Chinese consumers have lost their trust in domestic dairy products after Sanlu Group was found to have adulterated its infant formula with melamine in 2008, which resulted in death of 6 children and undesirable impacts on about 300,000 babies. Recent years have witnessed sluggish domestic dairy industry but soaring sales of imported milk products. Despite the current poor performance of indigenous enterprise operating in this industry, the dairy product safety issues still keep occurring, indicating the government’s poor and inefficient supervision.

However, it seems that the disappointing situation is starting to change. On 31 May, Premier Li Keqiang stressed on the Executive Meeting of State Council that China should spare every effort to enhance the quality of domestic infant formula and rebuild consumers’ confidence. Li’s remarks show the central government’s determination to rectify the whole dairy industry and a series of measures are expected to follow.

Later on 20 June, in response to Premier Li's urge, 9 ministries, including CFDA, MIIT, MPS, MOA, MOFCOM, NHFPC, GAC, SAIC and AQSIQ, jointly released the “Opinions on Further Intensifying Quality and Safety of Infant Formula”, in which quite a few new polices are proposed that are likely to bring about huge and far-reaching impacts on both domestic and imported baby milk powder and trigger great changes in Chinese dairy industry.

Major Influences on Imported Infant Formula

1. Before import, the overseas manufacturer should fulfill registration with China Certification and Accreditation Administration otherwise any infant formula products made by the unregistered will be forbidden to enter into China.

2. According to the “Opinions”, baby milk powder must arrive in China in packages ready for retail instead of in bulk consignments in order to avoid repackaging for subsequent sale, which is banned now.

3. Imported milk powders are faced with strict inspection and quarantine procedures. For instance, the Chinese labels of imported infant formula are required to be printed on the minimum packaging prior to importation. The local CIQs will reject or dispose any products without standardized Chinese labels. Generally, the milk powder has to go through five checkpoints set by CIQs (see Chemlinked news on 3 Jun). Besides, those products with shelf life less than 3 months when they arrive at ports will also be rejected. 

Domestic Dairy Industry Reform

Adopting drug management mode

Under the “Opinions”, infant formula will be regulated with the similar stringent control measures for drugs.

1. Stricter production licensing

• According to relevant drug management measures, CFDA initiates the amendment of “Rules for Examination on the licensing conditions of Enterprises Producing Infant Formula (2010)”, which will raise higher requirements for milk source, raw materials, production equipment, quality management system, production process control, testing ability, level of personnel, the working environment, innovation ability, etc. The revision is expected to be finished in Sept, according to CDFA.

2. GMP

• By referring to the Good Manufacturing Practice certification system for drugs, it will be mandatory for the infant formula manufacturers to comply with the National Food Safety Standard: Good Manufacturing Practice for Powdered Formulae for Infants and Young Children (GB 23790-2010).

3. Electronic traceability system

• Electronic coding for drug supervision will also applied to monitor each phase of the production process of milk powder to make every link traceable.

4. Record-filing of formula and ingredients

• In the near future, producers must report to the local FDA the formula and ingredients of every product for record filing. Any change made needs re-reporting.

High quality source of milk

Manufacturers must have their own dairy farms to make sure milk source of high quality. Those small milk sheds without certification will be weeded out. 

Getting tougher on approving new infant formula companies

The government will tighten its approval on new manufacturers or related projects or their expansion. Meanwhile, a large scale examination campaign lasting from 1 Jun to 30 Sept has been started to check those companies set up since 2011. The baby formula firms with poor quality milk source and outdated production technology and testing instruments will be ordered to shut down.

Encouraging merger and acquisition

 At present, there are 127 infant formula manufacturers in China. The government encourages the merger and acquisition of those companies to propel centralization management over the industry and its standardization. On Tuesday, China Mengniu Dairy Co Ltd agreed to acquire the privately-owned Yashili International and it is said that Yili intends to acquire Fenhe Dairy and Wondersun Dairy Inc. The consolidation will create more dairy giants that can compete with prevalent rivals from Germany, New Zealand or Australia, etc. and increase peoples’ confidence in domestic brands. 

Five must-not for all manufacturers:

1. Outsourcing;

2. Original equipment manufacturing; 

3. Repackaging for subsequent sale;

4. Use the same formula to make different brands;

5. Use raw milk not from cows and sheep

The government's intensive execution of the above-mentioned key policies is the crux to upgrade the whole dairy industry and recoup the public's trust. What really significant is that subsequent specific rules need to be drafted as supporting legal references to bring those navigating policies into full play.