April 14, 2004

China Dairy Co Meng Niu Battles Rumors Ahead Of Offering

In one of China's first cases of industrial sabotage, a dairy giant based in the Mongolian grasslands of the country's north was the target of false claims that its products were poisoned, officials said Tuesday.
 
Meng Niu, founded in 1999 by a livestock herder in Inner Mongolia, is China's fourth biggest dairy and claims the honor of being the maker of the "official milk" of the Chinese space program. Its cartons, adorned with black-spotted Jersey cows, can be found in almost any local supermarket.
 
The attack on the rising corporate star, now under police investigation, is thought to have been aimed at derailing the company's plans to list its shares in New York and Hong Kong later this year.
 
Health officials in central China's Hubei province said they received notice in late March of an anonymous letter claiming that Meng Niu's milk contained "poisonous ingredients."
 
"We told more than 30 relevant units to immediately check into the situation. They soon concluded there was no problem with Meng Niu's products," said the head of the general office at the Hubei Health Bureau's Sanitary Supervision Office. He refused to give his name.
 
Though the allegation proved to be false, sales suffered after health authorities issued a public warning.
 
The health official said his department had tried to protect Meng Niu by keeping news of the sabotage secret but it was "maliciously spread around."
 
The health bureau issued a notice in a local newspaper, the Hubei Daily, noting that the government reserved the right to sue anyone spreading irresponsible rumors, he said.
 
Meng Niu declined comment, referring inquiries to Ogilvy Public Relations in Beijing.
 
A spokeswoman there, Cai Xueqin, said Meng Niu expected an "obvious impact" on sales, at least in Hubei. She couldn't provide specific figures but noted: "Since the Hubei market is a very small part of Meng Niu's sales, I don't think the overall business will be affected."
 
Cai said the company wouldn't speculate publicly on the motives for the attack but would wait for the outcome of the police investigation.
 
"We only suspended sales for one day, and the rest of our sales and promotion activities are going ahead as planned," she said. "The local health bureau has already proved our products to be safe. We're looking forward to
the facts being clarified to the public by the police."
 
Most other cases of commercial sabotage have involved rival restauranteurs or small shop owners poisoning their competitors' products.