On 12/2, China's National Administration for Market Regulation (SAMR) issued a notice requiring infant formula manufacturers to strictly control raw materials and production processes. Local authorities were also instructed to enhance oversight of safety and quality standards. This directive comes despite China not yet recording any poisoning cases linked to infant formula.

The incident began with Nestle SA's discovery of the cereulide toxin in infant formula. This toxin was traced to ARA oil supplied by Wuhan Cabio Biotech Co. in China. Sources close to the matter confirmed Cabio as the supplier. The revelation led to a 16% drop in Cabio's stock price this year. Cabio is a major global producer of ARA, providing ingredients to international companies like Nestle and Danone SA, as well as domestic brands such as China Feihe and Junlebao. Previously, the Dutch chemical conglomerate DSM-Firmenich held a monopoly on this ingredient.

Illustration: iStock

China's enhanced supervision is a critical step to safeguard investor and consumer confidence, as the nation's suppliers are a key link in the global powdered milk industry. Earlier, officials directed Nestle to recall specific batches in mainland China after detecting the toxin, which can cause vomiting and foodborne illnesses. Since January, Nestle expanded its recall scope from Europe to Asia and the Americas. Danone and several other companies also withdrew products in numerous countries.

This decision marks China's latest effort to strengthen regulation of the dairy industry through clear cereulide testing mandates. While manufacturers maintain no confirmed illnesses are linked to the recall, authorities in multiple countries continue to investigate potential cases. The global powdered milk crisis started on 5/1 when Nestle identified "quality issues" with a supplier's raw materials. This prompted product recalls across many European countries, with the impact quickly spreading to Africa, the Americas, and Asia, involving many major dairy companies.

French officials are investigating a potential connection between Nestle's Guigoz milk formula and the deaths of two infants. In the United Kingdom, health agencies reported 36 suspected cases of illness in children who consumed contaminated powdered milk.

Binh Minh (According to Bloomberg)