The Chinese Tainted Milk Scandal
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Case Details:
Case Code : BECG092
Case Length : 15 Pages
Period : 2008-2009
Pub Date : 2009
Teaching Note : Available
Organization : Sanlu Group and other dairy products companies
Industry : Food and Beverage
Countries : China
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts Contd...
The Impact on Chinese Dairy Industry
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The milk scandal severely dented the trustworthiness of China's dairy companies. The companies were criticized for not reacting immediately.
Sanlu was the worst affected among the Chinese dairy companies. The company was criticized the most as it had been receiving complaints from consumers since December 2007, but had not informed local authorities till August 02, 2008. It was also alleged that from August 02 to September 12, 2008, Sanlu had produced 904 tonnes of baby formula and sold 813 tonnes, earning 47.5 million Yuan (6.9 million US dollars). The company was also flayed for issuing its first public apology only after the Health Ministry of China confirmed that the baby formula made by the company was contaminated with melamine...
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The Aftermath
On January 02, 2009, a text message which claimed to have been issued by the Chinese dairy firms that had sold melamine contaminated milk was widely circulated in China. In that message, the firms apologized for their role in the milk scandal. Although the dairy companies apologized, promised to give compensation, and bear the cost of treatment of the affected children, analysts pointed out that these companies had sold the toxic baby formula for financial gains...
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Exhibits
Exhibit I: A Note on China's Dairy Industry
Exhibit II: Stock Prices of Yili
Exhibit III: List of Some Countries and their Response to China's Milk
Scandal
Exhibit IV: Exports of Dairy Products from China (2001-05) |
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