BEIJING (AP) — Nearly half of all dairies in China are being shut down after having their licenses revoked, the government's quality inspection agency said Saturday, in the latest attempt to clean up the scandal-plagued dairy industry.
The agency said 533 of the country's 1,176 dairy producers have been ordered to cease operations. Only 107 of those failing producers will be allowed to apply anew for licenses once they improve quality controls, the agency said in a statement on its website.
The government ordered a full-scale review of dairy licenses late last year after yet more contaminants appeared in milk supplies despite periodic cleanup campaigns. The government efforts and public outrage date to 2008 when milk products sickened children and at least six died. An investigation discovered that milk suppliers were adding the industrial chemical melamine, which is used to make plastic. Hydrolyzed leather protein, which is made from leather scraps, turned up in milk this year. Both additives allow watered-down milk to appear to have normal levels of protein.
While the government announcement did not identify which dairy producers will be shut down, previous reports in state media said the campaign was mostly directed at smaller companies. Only larger dairies are likely to be able to afford the specialized equipment that tests for additives like melamine and that the government is now mandating all producers install.
As such, the move is likely to favor already dominant producers, such as Mengniu Dairy Group Co. and Yili Industrial Group Co., allowing them to strengthen their leads in the market.