BEIJING Oct 15 French food maker Danone S.A.
said it will appoint new management at its Dumex
infant milk powder operation in China and has suspended a
nutrition programme for mothers in the wake of a bribery scandal
at Chinese hospitals.
Dumex China expressed "deep regret" for what it called
shortcomings over a programme that was intended to raise
standards in paediatric care and included advice on nutrition.
The company launched an investigation after the official
China Central Television (CCTV) reported in September that Dumex
had bribed doctors and nurses across hospitals in northern China
to recommend its infant formula to mothers.
Authorities in the northern city of Tianjin had punished 13
medical workers for taking bribes to recommend the infant
formula, the local government said on Monday.
China is a magnet for foreign milk powder makers, with the
country's $12.4 billion market expected to double by 2017.
But foreign firms are under intense scrutiny after a spate
of media reports alleging corrupt sales practices in the
industry. Authorities in August also fined a group of mostly
foreign milk powder producers including Danone a total of $110
million for price fixing.
Danone reports third-quarter sales on Wednesday, giving the
firm an opportunity to brief investors on its problems in China.
"Disciplinary actions will be taken according to the
relevant company regulations including appointing new management
personnel to deal with relevant issues," Dumex China said in a
Dumex said its policies included support for maternal breast
feeding, as well as compliance with all local and national
regulations in China.
However, it said some practices had contradicted the purpose
of the nutrition programme. It did not elaborate.
Additional mandatory training to ensure compliance with the
company's marketing policies would be given to all employees,
the statement said. Dumex added it would make no further
The statement did not refer to separate accusations
published in a Chinese newspaper last month that Danone's
advanced medical nutrition unit Nutricia had bribed more than
100 doctors in Beijing to boost sales. Danone has said it was
investigating that report.
The CCTV report on Dumex led to Tianjin's government and
police launching an investigation into the bribery accusations.
The "serious violators" received penalties ranging from
cancellation of medical licences to salary deductions, Tianjin's
government said in a statement on its website. Several of them
had to go through Communist Party disciplinary procedures.
Local government investigators said the workers were among
116 people from 85 hospitals and health groups who took bribes
from Danone to give talks to parents of newborns, recommend
Dumex formula and give out product samples.
World Health Organization guidelines, implemented in China,
say doctors must advise new mothers to breastfeed unless there
are medical reasons to use formula instead.
Infant formula has been controversial in China since a
scandal in 2008 when the industrial chemical melamine was added
to baby milk and killed at least six children and left thousands
The incident seriously damaged consumer confidence in local
firms and led to international competitors gaining market share.
Corruption is widespread in China's health care system,
fuelled in part by low salaries for doctors and nurses.
(Additional reporting by Megha Rajagopalan. Writing by Dean
Yates; Editing by Edwina Gibbs)