December 30, 2008

China's dairy companies to pay RMB1.1 billion for melamine case

The 22 dairy firms whose products were found contaminated with melamine are likely to pay RMB1.1 billion (US$160.8 million) of compensation to the families of nearly 300,000 affected children, according to official sources.

About RMB900 million will be paid in cash as one-off compensation, said a report by the China Business News.

The remaining RMB200 million will go to a new medical fund to cover bills for any lingering health issues related to the tainted milk, said a source from the China Insurance Regulatory Commission.

The source also said China Life, the country's largest life insurer, has been appointed to manage the compensation fund.

Families of children who died from consuming the tainted milk will each receive RMB200,000, while gravely ill children will receive about RMB30,000 each. Those suffering from minor kidney problems will each receive RMB2,000, according to the Guangzhou Daily.

However, critics said the compensation plan is inadequate and lacked transparency, and the issued amount of money would not be enough to cover the medical expenses. Many affected families are also reportedly not included in the latest compensation.

US$1 = RMB6.8337 (Dec 30)