Business Intelligence on Retailing, Franchising, and Consumerism in China

Sanlu Group's Seven Subsidiaries Resume Production In North China

According to a senior official of the Shijiazhuang government Sanlu Group, which had suspended production because of the melamine milk scandal, has resumed production.

Li Jinlu, executive vice-mayor of Shijiazhuang, said at a meeting of the city people's congress that a factory wholly owned by Sanlu Group was ready to restart production. At the same time, the group's seven subsidiary companies, including those producing milk under the Wahaha and Feihe brands, have resumed production after changing their names.

Li said that the guideline from the government is that the dairy companies in Shijiazhuang should resume operations before restructuring.

It is reported that a plan for the restructuring and development of Sanlu Group has been proposed to the Chinese Ministry of Industry and Information Technology; and that negotiations with companies — including Wondersun and Sanyuan — that have bid to acquire Sanlu are still ongoing.

Sanlu products were earlier found to contain melamine, which is used to increase the appearance of protein in milk. Children can develop kidney stones as a result of drinking melamine-contaminated milk. After the scandal surfaced, all the 16 dairy companies in Shijiazhuang, where Sanlu's factories are located, were ordered shut. So far, over 15,870 tons of melamine-contaminated dairy products recalled by Sanlu Group have been destroyed.

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