China's dairy industry in recovery

The dairy industry's melamine scandal in September 2008, severely hurt consumer confidence in China. After strict examination and restructuring, the battered industry is now gradually stepping out its shadow.

At a supermarket in Beijing, crowds gather at the dairy sections. People who were once scared by the scandal, say they are now starting to trust the products again.

Ms. Wang, one Beijing shopper said "I can trust it now. The government has implemented strict supervision, and manufacturers now have self-discipline."

Staff Member of Beijng Wu-Mart said "After the scandal broke out, only three brands remained on our shelves. Now more than 10 companies have resumed sales. We have added two new shelves for them."

From January to September, total output of dairy products rose by about three and half percent from the same period of last year. And for September alone, output rose almost one third from a year ago. More than 95 percent of the products have been sold.

Dairy giant Mengniu Group was hit hard by the melamine scandal. The company is now seeing its operations return to normal.

Yao Haitao, Vice President of Mengniu Dairy Group said "Generally speaking, Mengniu's production, sales and profitability have been recovering since this year."

Beijing Sanyuan Group was one of the exceptions that avoided last year's scandal. Earlier this year, the company acquired the bankrupt Sanlu Group. Its factories were taken over and are now contributing to Sanyuan's profit margins.

Niu Liping, General Manager of Beijing Sanyuan Group said "During the first nine months, our sales volume increased more than 80 percent. The assets acquired from Sanlu has had 30 percent of its production resumed."

To protect the up-stream of the industry chain, the government has provided subsidies for manufacturers to purchase milk from dairy farmers. It also carried out reserve projects for milk powder. These measures have guaranteed the recovery of the dairy industry.