China Consumer

Baby, we’ve got a problem

The latest foreign brand to be hit by scandal: Danone’s Dumex

NEWZEALAND-MILK/FONTERRA

In the spotlight: Dumex formula

Salaries for doctors and nurses in China are often pitifully low. A recently graduated medical student earns about $500 a month. All of which makes hospital staff very susceptible to gifts or bribes.

In China’s main cities it is routine to buy appointments rather than put your name on the waiting list and if you are admitted to hospital it might be worth greasing a few palms to ensure full and proper attention.

But according to a raft of recent reports, it is not just the patients who have been offering the incentives.

As readers of WiC will know, the UK drug giant GlaxoSmithKline, and French pharma firm Sanofi are both under formal investigation for paying medical staff to prescribe their medicines. Last month the Chinese offices of German pharmaceutical company Bayer were also raided by the State Administration for Industry and Commerce – the body in charge of enforcing non-price related antitrust law.

Thus far Bayer has not been drawn into any action similar to its two European peers.

However, as of this week, it seemed that the spotlight might soon (again) involve the activities of foreign baby formula producers – this time owing to their activities in maternity wards.

On Monday morning state broadcaster CCTV aired a long, undercover news report that alleged foreign milk powder firms were paying doctors in hospitals in the eastern city of Tianjin to tell new mothers to use their formula instead of breast milk. Although the report said that many brands were engaged in such activity, concrete allegations were made only against Dumex, a baby formula brand owned by French dairy giant Danone. “Each year we gave hospitals hundreds of thousands of yuan to reach an understanding,” a person who claimed to be a former employee of Dumex told CCTV.

“The Tianjin market is very competitive, all the hospital floors ‘belong’ to different milk companies. If the money that you give is insufficient, your milk will be replaced by another the following month,” she added.

On Monday Dumex released a statement saying it was “shocked” by the allegations and that it was launching an investigation to discover whether they had any merit.

The CCTV report comes only a month after several baby formula companies were found guilty of price-fixing. Six of them, including Danone, were fined a collective $110 million (see WiC201).

The issue is a sensitive one in China because many parents, even those on relatively low incomes, feel compelled to buy imported products because of the melamine milk powder scandal in 2008 which killed six infants and sickened tens of thousands of others (see WiC6).

Shortly after the latest expose aired on CCTV the programme became a hot topic on China’s most popular microblogging website, Sina Weibo.

“Appalling. You and I see a baby, but they only see money,” wrote one user without clarifying who shemeant by ‘they’.  Another wrote: “So I guess I was cheated. My son was just born in hospital and they recommended Dumex.”

Yet while there was fury that newborns may have been the unwitting victims of corruption, few contributors placed the blame solely on the milk companies.

“The milk producers’ actions are beside the point. The key question is why the hospital takes the money,” wrote one.

Others questioned another of the dramatic premises in the programme – that mothers were being steered away from breastfeeding.

As on weibo user wrote: “Of course breast is best but some mothers can’t breast feed. And at least they are trying to get us to use healthy [foreign] milk.”


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