As the scandal of China's tainted milk threatens the country's dairy industry, foreign brands and Chinese producers not involved in the scare have seen business opportunities.

"We've received many calls from distributors offering to sell our baby milk powder in the past few days and we are ready to increase output," said Ma Guowu, sales director of Beijing Sanyuan Foods Co., Ltd., a major producer whose baby formula and liquid milk passed national safety inspections last week.

He said sales of Sanyuan's liquid milk surged 200 percent on Friday after China's quality watchdog revealed on Thursday the company's products were safe.

Melamine, a chemical that has caused kidney stones in more than 6,000 babies across China, was detected in liquid milk produced by China's top three dairy companies: Bright Dairy, Yili and Mengniu.

Prior to that, the chemical was discovered in baby formula sold by 22 of 109 Chinese firms, including Sanlu, which had the highest content of melamine.

Domestic baby milk powder brands uninvolved in the contamination saw sales dip 33 percent in six days to Wednesday in the country's 350 biggest retailers, the Ministry of Commerce said Saturday.

The sales rebounded 20 percent on Thursday from the day before and a further 4 percent on Friday.

The Sanlu scandal dealt a heavy blow to the industry, but would give those brands considered safe a very good opportunity to stand out, said dairy analyst Chen Lianfang, of Beijing Orient Agribusiness Consultant, Ltd.

Meanwhile, the foreign dominance of the high-end baby formula market was expected to be strengthened, said Chen.

Public affairs director of U.S. producer Wyeth, Xu Haiyin, told Xinhua orders for milk powder in China were up more than 400 percent since the scandal broke. Ninety percent of the company's milk powder was imported.

U.S. rival Abbott, whose baby formula was all imported, was making plans to increase supply in China, said Wang Ling, public affairs director of Abbott.

Similar moves were also underway at Dumex, a baby formula brand under the French food group Danone, according to the company's external affairs director Pu Jiabin. The company has said its milk powder was made in China with imported raw milk.

The world's biggest dairy trader Fonterra, which owns 43 percent of China's Sanlu Group, said Tuesday its own Chinese business had voluntarily recalled one batch of Anmum Materna milk that had been manufactured and distributed under licence by Sanlu using what they believed to be contaminated local raw milk.

Foreign brands such as Mead Johnson, Wyeth, Dumex and Abbott took more than 70 percent of China's market for high-class baby milk powder, according to Beijing-based market research agency CTR in 2007.

Despite the impact of the Sanlu scandal, China-made milk powder still enjoyed price advantages and would hold on to its dominance of the mid and low-end market, said Chen.

Most of the baby formula under foreign brands are sold around or above 150 yuan per 900 grams in China, more than three times the price of Sanlu.

"We should not be too pessimistic. China has a vast low-income population and we'll focus on meeting their demand with cheap, but quality milk powder," said Ma Guowu.

On Saturday, 21 producers of baby formula submitted letters of commitment to the country's quality watchdog, pledging to compensate consumers and take responsible for the care of those who were ill.

China's dairy market would double to reach US$20 billion in 2010, according to a report by consultant firm McKinsey released in 2006.

(Xinhua News Agency September 22, 2008)