Danone in management shuffle amid China bribery claims

A Chinese mother looking at baby milk formula in a store in China China has been hit by a series of milk-related scandals over the past years

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Dumex, a baby food brand owned by French firm Danone, has said it will appoint new management following allegations of bribery in China.

Last month, a report carried by China Central Television alleged the firm paid doctors to promote its products.

Dumex said the claims were related to its sponsored programme on nutritional awareness in China.

The company said it accepted "full accountability" for lapses in it and had suspended the programme.

"Disciplinary actions will be taken according to the relevant company regulations including appointing new management personnel to deal with relevant issues," Dumex China was quoted as saying by the Reuters news agency.

The firm added that it would implement a three-month training program in marketing responsibility for all employees to ensure compliance with company policies and government regulations.

The CCTV report, which cited an unidentified former sales manager, alleged that Dumex paid doctors and nurse in the northern city of Tianjin.

The company said at the time that it was "extremely shocked" by the allegations and announced an internal probe into the matter.

Growing demand

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.

Danone is one of the firms that has benefited from the rising demand. It 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.

However, it has faced problems in the country 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.

Targeting corruption

The allegations against Danone have surfaced amid a government-led crackdown on corruption in its $350bn (£220bn) healthcare market.

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 was accused of giving "sponsorship fees" or payments of up to 10,000 yuan ($1,632) to hospital staff.

A separate report carried by Chinese newspaper 21st Century Business Herald last month, made similar allegations against another Danone unit.

It alleged that Nutricia, maker of Karicare milk formula, bribed doctors to boost sales.

The report, which also cited an unidentified person, claimed that the unit gave gifts and travel subsidies to more than 100 doctors in 14 hospitals in Beijing.

The statement issued by Dumex, did not refer to those allegations.

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