Fonterra says sorry for 'anxiety'(2)

China has now halted the import of all milk powder from New Zealand, according to Reuters, which cited New Zealand's trade minister, Tim Groser.

The New Zealand dollar dropped to its lowest level in a year against its US counterpart on Monday. In contrast, Chinese dairy companies reported a rise in their share prices: for example, Royal Dairy Co, based in Guangxi Zhuang autonomous region, surged 7.32 percent and closed at 14.52 yuan ($2.37).

Consumer confidence in foreign-branded formulas has declined sharply in the wake of the news, and some industry professionals say that may provide opportunities for domestic producers to move in on the market.

According to milk industry expert Wang Dingmian, foreign brands hold a share of almost 60 percent of China's baby formula market. In the first half of this year, China imported 445,000 metric tons of raw milk powder, with approximately 80 percent coming from New Zealand. Fonterra supplied 70 percent of the raw milk powder imported from New Zealand over the same period. China is New Zealand's largest trading partner.

Consumers said the incident has attracted wide attention because most of the products involved are stage 2 infant formula, which is in high demand in China.

"Many young mothers in China stop breastfeeding their children when they are around 12 months old and opt for stage 2 baby formulas," said Feng Yanyun, a Shanghai resident who has a 2-year-old son.

Taken off the shelves

Retailers were quick to move to counter the threat. Carrefour China ordered the removal of questionable batches of Dumex infant formulas from the shelves of its more than 100 Chinese mainland stores on Monday.

"Some of the products on the shelves belonged to the 12 batches. They have now been removed," said a spokesman for Carrefour in Shanghai who would only give his surname, Ji.

However, he said Carrefour had not received notices ordering Wahaha or Coca-Cola products off the shelves, or any recall notices from the suppliers.

"We'll keep in close touch with the municipal quality and market watchdogs and take measures according to their instructions," said Ji.

Wu Aiqin, a sales clerk at an E-mart store in Shanghai's Huangpu district, said relevant batches of Dumex milk powder were removed from the shelves on Monday.

However, Dumex infant formulas were still on sale at a Wal-Mart on Lujiabang Road, where they occupied more than one-third of the available shelf space for infant formulas.

"We have not received any notice to withdraw Dumex products," said the salesclerk, who gave her surname as Zhao. Although the products were produced in May and June, they do not belong to the 12 questionable batches.

Dumex formulas were also on sale at an outlet of Mogobaby, a chain store that specializes in maternity and baby products, located in Shanghai's Songjiang district, according to a sales clerk who only gave her surname as Zhao.

"If customers bought the Dumex products with the batch numbers detailed in the company's statement, they can bring them to our stores for exchange or return them for a full refund," she said.

Many store managers on Taobao, China's leading e-commerce platform, who provide infant formulas purchased overseas, said their business has been affected by the scare.

"The sales volume slumped yesterday and today after the news about Fonterra exploded. On average, I sell 650 tins of Dumex Stage 2 every month. Yesterday I sold just six and today I haven't sold any," said a store manager, who asked to be identified simply as Barbara, on Monday.

Business was also affected at online stores selling Karicare baby formulas, after the Australia-based baby formula maker Nutricia, also a Danone subsidiary, recalled three batches of its Karicare infant formula from the New Zealand market.

Karicare is a leading baby formula producer in New Zealand, boasting 72 percent of the market share in the country, according to its official website.

The products recalled in New Zealand are: Infant Formula Stage 1 (0-6 months) with the batch numbers 3169 and 3170, and Kariare Gold+ Follow On Formula Stage 2 (6-12 months) with the batch number D3183.

China's quarantine authorities said the three batches have not been imported to China through normal trade channels, but warned consumers to check the batch numbers if they have recently brought any of the formula from New Zealand or bought the products through unauthorized channels online.

China's top quality watchdog issued a notice early on Monday morning, advising parents not to feed infants Karicare Stage 1 and 2 products to minimize risks.

"Nearly 100 customers had spoken to me by noontime today. All of them were asking about the safety of our products, and no one bought any," said a store manager on the taobao platform.

"Although I insisted the products in my store don't belong to those problematic batches, and even attached photos of the batch numbers on the bottom of the tins, I can't win the trust of the consumers," she said.

The Shanghai-based online store has an average monthly sales volume of more than 200 tins of Karicare products, but didn't sell a single tin on Sunday or Monday.