French food maker Danone SA said it would appoint new management at its Dumex infant milk powder operation in China and has suspended a nutrition program for mothers in the wake of a bribery scandal at Chinese hospitals.
Dumex China expressed “deep regret” for what it called shortcomings over a program that was intended to raise standards in pediatric care and included advice on nutrition.
The company launched an investigation after China Central Television (CCTV) reported last month 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 US$12.4 billion market expected to double by 2017.
However, 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 US$110 million for price fixing.
Danone reports third-quarter sales today, 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 statement.
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 program. 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 comment.
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 cancelation of medical licenses to salary deductions, Tianjin’s government said in a statement on its Web site. Several of them had to go through disciplinary procedures by the Chinese Communist Party.
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