Chinese government is investigating foreign producers of baby milk. They have been accused of price fixing.
Demand for foreign brands has surged in China after tainted milk scandals.
Nestle's unit, Wyeth Nutrition, will slash prices by 20%.they have agreed to not raise prices for a year. Danone said it was co-operating with the probe and was preparing a price-cut proposal.
According to some estimates, foreign brands now account for about half of all infant milk sales in China.
Nestle, Danone, Mead Johnson Nutrition and Abbott Laboratories are among the firms that are being investigated.
China has faced a series of milk-related scandals.
In 2008, six infants died of severe kidney damage and an estimated 300,000 babies suffered from kidney stones after drinking tainted baby formula because it contained melamine. The formula, from several major Chinese dairy companies, was tested and found to contain melamine, an additive that falsely boosts the protein levels in milk.
In December 2011 and July 2012, two Chinese companies recalled baby formula containing high amounts of aflatoxin, a carcinogen produced by fungus in cows' feed.
Last year, another company issued a separate recall after "unusually high" levels of mercury were found in its main line of infant milk powder.
That has led to a global surge in demand for the products.
Milk is not the only food product that the Chinese are buying from overseas producers. The Chinese do not trust their own food producers. not only are they producing unsafe products they are producing fake food. Many Chinese spend a major portion of their income on foreign food.
Source BBC
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