Danone food unit Nutricia has started an internal investigation into bribery claims in China.
A report in Chinese newspaper 21st Century Business Herald has alleged that Nutricia, maker of KariCare milk formula, bribed doctors to boost sales.
The report, which cited an unidentified person, claimed that the unit gave gifts and travel subsidies to more than 100 doctors in 14 hospitals in Beijing.
This is the second such allegation made against a Danone unit in recent weeks.
“At the moment we still don’t know the details,” Zhao Qinghua, a spokeswoman for Nutricia in China, was quoted as saying by the Reuters news agency.
“We need to wait to see the outcome of the investigation before we can make our next plans.”
A report in Chinese newspaper 21st Century Business Herald has alleged that Nutricia, maker of KariCare milk formula, bribed doctors to boost sales
Earlier this month a report on China Central Television alleged that Dumex, a baby food brand owned by Danone, bribed doctors to boost sales.
It was accused of giving “sponsorship fees” or payments of up to 10,000 yuan ($1,632) to hospital staff.
Dumex said it was “shocked” by the allegations and was investigating the claims.
The French food giant has also faced other problems in China this year.
Danone cut prices for its infant milk formula products by as much as 20% after China’s top economic planning body fined it in August for price-fixing.
The company also had to issue a precautionary recall of its milk formula products last month after one of its suppliers, Fonterra, said some items may have been contaminated.
Demand for foreign brands has surged in China, after tainted milk scandals in recent years led to a distrust of local producers.
According to some estimates, foreign brands now account for about half of all infant milk sales in the country.
However, foreign companies have come under scrutiny recently amid a government-led crackdown on corruption in the healthcare sector.
Dumex – Danone baby food unit – said it is investigating claims the company bribed hospital staff in China to use its products.
According to China Central Television, Dumex allegedly paid doctors and nurses in the northern city of Tianjin to promote its baby formula products.
The report, which cited an unidentified former sales manager, comes amid an anti-corruption drive by Beijing.
Dumex said it was “extremely shocked” by the allegations.
“Dumex Baby Food Co strictly adheres to Chinese laws and regulations,” a company spokeswoman said in a statement.
The latest allegations against Danone come amid a government-led crackdown on corruption in its $350 billion healthcare market.
Dumex allegedly paid doctors and nurses in the northern city of Tianjin to promote its baby formula products
Some inquiries have targeted foreign firms, including British pharmaceutical giant GlaxoSmithKline, which is being investigated for allegedly using inducements to promote the sale of its medicines.
In the CCTV report, Danone’s Dumex brand is accused of giving “sponsorship fees” or payments of up to 10,000 yuan ($1,632) to hospital staff.
The French food giant has faced numerous problems in China this year.
Danone cut prices for its infant milk formula products by as much as 20% after China’s top economic planning body fined it in August for price-fixing.
The firm also had to issue a precautionary recall of its milk formula products last month after one of its suppliers, Fonterra, said some items may have been contaminated.
China is an important market for companies such as Danone, which is the country’s third-largest baby formula provider.
Danone’s baby nutrition unit also makes more than 20% of its overall sales from China.
Demand for foreign brands has surged in China, after tainted milk scandals in recent years led to a distrust of local producers.
According to some estimates, foreign brands now account for about half of all infant milk sales in China.
China has banned all imports of milk powder from New Zealand, after its main dairy exporter, Fonterra, found in some of its products a strain of bacteria that can cause botulism.
China relies on New Zealand for almost all its imports of milk powder.
Imports are highly prized in China after a tainted milk formula scandal in 2008 killed six babies and made some 300,000 infants sick.
New Zealand’s trade minister described Beijing’s decision as “appropriate”.
Fonterra’s announcement that it had found the contamination led to a global recall of up to 1,000 tonnes of dairy products across seven countries, including China.
The potentially tainted products included infant milk formula, sports drinks, protein drinks and other beverages.
Botulism is one of the most dangerous forms of food poisoning, often leading to paralysis.
The bacteria were found in three batches of Fonterra’s whey protein used in infants’ Nutricia Karicare follow-on formula, Fonterra said.
China has banned all imports of milk powder from New Zealand
Nearly 80% of dairy products imported by China come from New Zealand, according to state media.
Any prolonged ban of imports could well lead to a dairy shortage in China
New Zealand Trade Minister Tim Groser said China’s action was “entirely appropriate”.
“It’s better to do blanket protection for your people then wind it back when we, our authorities, are in a position to give them the confidence and advice that they need.”
The Chinese authorities named four domestic companies that have imported potentially contaminated products from New Zealand. According to state media, these companies have begun a recall.
The whey product was produced in May 2012, with a dirty pipe at one of Fonterra’s processing plants in Waikato responsible for the contamination, the company said.
Fonterra – the fourth largest diary company in the world – said it had urged its customers to urgently check their supply chains.
The countries affected besides New Zealand and China include Australia, Thailand, Malaysia, Vietnam and Saudi Arabia.
Russia is also reported to have begun a recall of Fonterra products.
Fonterra said there had been no reports of any illness linked to the affected whey product.
The dairy industry powers New Zealand’s economy, with the country exporting up to 95% of its milk.
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