Synlait owners in Chinese scare
Canterbury milk processor Synlait is standing by its Chinese majority owners which are caught up in a food safety scare.
Shanghai company Bright Dairy & Food Co had to recall about 300 cartons of milk in China after reports this week it was found tainted with an alkaline detergent.
The detergent is believed to have been used for cleaning milk equipment and found its way into the company's branded Ubest fresh milk, resulting in cartons being removed from shelves.
Synlait chief executive John Penno said Synlait had been kept informed of "the issue".
"Our only comment would be Bright has an extremely good reputation in the Chinese market. They are taking the matter very seriously and working with authorities and investigating it. We don't know more than that."
Penno declined to comment if the milk recall would harm Synlait's reputation.
Nor was he in a position to distance this incident from previous food safety scares with milk in China.
"We don't want our shareholders involved in a major problem."
The partnership between the companies was unveiled in 2010 with Bright Dairy investing $82 million for a 51 per cent controlling stake in Synlait. Bright Dairy is majority-owned by Bright Food Group and its main shareholder is the Shanghai municipal government.
The cash injection contributed towards doubling the size of Synlait's Dunsandel processing site with Bright's connections providing markets for high-quality infant and wholemilk powders in China.
Penno has previously said Synlait would distance itself from "quality issues" by not mixing or blending its premium products with other products in China and they would be exported in packs ready for supermarkets.
Bright Dairy is understood to have issued apologies for the tainted milk, compensated customers and is testing equipment.
Authorities are considering the incident mismanagement rather than intentional wrongdoing, according to English language Chinese newspaper Global Times.
China has a history of milk controversies and the worst was the melamine scandal in 2008 when several babies died and tens of thousands were made sick from milk contaminated with melamine added by farmers to restore protein levels after water was placed in milk to increase volumes.
Much of the contamination focus centred on SanLu although other companies were involved.
New Zealand co-operative Fonterra was a part-owner of SanLu at the time and blew the whistle by insisting on a recall. It was forced to exit processing in China at large cost.
Since then infant formulas made by Fonterra and other New Zealand milk companies have been high in demand by Chinese shoppers distrustful of local product.
Global Times said the Bright Dairy recall comes just weeks after China's leading dairy producer Inner Mongolia Yili Industrial Group recalled baby formula milk because of mercury contamination.
- © Fairfax NZ News
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