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China’s Killer Milk Leads to Soy Profits

Sep 18th, 2008 | By Stephanie Grimmett | Category: Emerging Markets

The milk industry in China is in shambles because at least three of the country’s major producers have been watering down their products. That’s not very scandalous. In fact, we have a name for that milk in the U.S. It’s called skim. But these Chinese producers were using a toxic chemical to mask their watery dairy products.

This is when I’m glad I’m lactose intolerant… and only buy American-made soy milk.

Last week, Cris Sholto Heaton advised readers to avoid the milk craze in China. And boy, did he turn out to be prescient.

The milk industry in China is in shambles because at least three of the country’s major producers have been watering down their products. That’s not very scandalous. In fact, we have a name for that milk in the U.S. It’s called skim. But these Chinese producers were using a toxic chemical to mask their watery dairy products.

Melamine, a chemical used to make fire retardants, glues and plastic countertops, and one that can give false readings of protein levels, was floating around in the milk cartons of China Mengniu Dairy (Hong Kong:2319), Inner Mongolia Yili Industrial Group (Shanghai:600887) and Bright Dairy & Food (Shanghai:600597), among others, and its presence in baby formula has already been blamed for the deaths of at least four infants.

The scandal already has its scapegoat in the form of Tian Wenhua, chairman at Sanlu Group, whose baby formula had the highest levels of melamine of those tested. Tian Wenhua was fired from her post at Sanlu. She’s lost her Communist Party position and the police brought her in for questioning earlier this week.

Anyone who remembers the tainted toys (and pet food, and toothpaste…) scandal of last year will also remember China’s swift “justice” in the situation. The country’s drug minister Zheng Xiaoyu was arrested for accepting bribes, tried for murder and executed within the span of a few months. And Zheng Xiaoyu’s specter is probably floating before the former Sanlu chairman’s eyes as you read this.

Perhaps what should most distress the Chinese, Taiwanese, Hong Kongers (according to Wikipedia, that’s what they’re called), Singaporeans and anyone else who drinks milk produced in China, is the revelation that many of China’s milk producers have official, government-sanctioned “inspection free” status.

It makes chills run up my spine. But there it is: The milk manufacturers didn’t have any oversight because their products were perishable and they had a good track record for health standards.

The government has officially removed the tainted milk companies from its inspection-free list. But that provides little comfort, and just leaves most of us wondering which food producers are still on that list and how can we avoid them.

Thankfully, back in his pre-scandal Chinese milk article, Cris recommended a soy drink company that’s based in Hong Kong and receives international inspection certification. The Chinese will be drinking a lot more of the company’s products now that milk is off the menu. And it’s definitely a good time to take a look at his alternative.

Source: China’s Killer Milk Leads to Soy Profits


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By Stephanie Grimmett

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Stephanie Grimmett is a contributor to Today’s Financial News.

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Today's Financial News provides an independent and practical perspective on the U.S. and global investment markets. We provide you with a free, reliable, easy, up-to-date, and focused resource to help you make your financial decisions with commentary, interviews, recommendations, and video. Today's Financial News includes the analysis and opinions of those editors whom we have come to trust over the course of the years.

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