China's dairy industry still trying to recover

After last year’s scandal, which killed six children and affected over 294,000 people, the dairy industry in China is still on the rebound. A 2008 disclosure about the addition of the industrial chemical melamine to milk products led to company losses of nearly $140 million. The added melamine made it appear that milk from undernourished cows had higher protein levels to get a better ‘quality check’ from the milk company.

China Mengniu Dairy Company, the nation’s biggest supplier of liquid milk, was one of the hardest hit with a loss of $138 million last year after being one of the firms found at fault in the scandal.

The company is expecting a net profit this year between $102 and $117 million with large thanks to state-owned and private equity firms. State-owned firm, Cofco, and private equity firm, Hopu Investement Management Company, are joining forces to invest $780 million for 20 percent stake in Mengniu.

While other smaller dairy companies are still suffering, Mengnui will use the added funds, as advised by the government, to enhance product quality.