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Case Study Sanlu

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Sanlu’s Melamine-Tainted milk Crisis: China

Sanlu (formerly Shijiazhuang Dairy Co.) one of the nation’s largest manufacturers of milk powder established in 1956 in the capital city of Hebei as a small dairy producer by Tian Wenhua becoming one of the 1st enterprise in China to launch an infant formula. Sanlu had been a leading company in both the agriculture and food processing sectors of China.
The fame and achievements rewarded to the company are:
The 1st largest manufacturer in China for infant milk powder production. Sanlu was the first company to be advertised on CCTV, the most influential media channel. It maintained the low cost strategy targeting the large number in the society. Sanlu was collectively controlling about 60% of the nation’s dairy market. Its joint venture with the nine other companies and donation of 4985 boxes of powdered milk for infants in Fuyang made it a model for handing crisis management for the nation. Its joint venture with New Zealand’s Fonterra one of the largest exporter of dairy products enhanced Sanlu’s leadership in milk production market. Forbes magazine listed Sanlu as one of the China’s top 100 enterprises. Sanlu had more than 30 production plants set up at different provinces all over China co-operating with 60,000 rural households in 5500 villages procuring a supply of 6800 tons of fresh milk …show more content…

The Central government wanted to promote self-regulation in China’s companies, exempting the inspection of the companies. Sanlu a major brand was exempted from the quality check which was one of the major cause of the crisis. In addition to this the government encourage Sanlu to reduce the price of their products in order to meet the demand of large sector of the society and only keeping the protein content level check which led to more cheating done by farmers to meet the low price

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