Yili plagued by usual Inner Mongolian dairy hi-jinks

China’s biggest dairy company – like its fellow Inner Mongolian rival Mengniu – has been plagued by food safety issues that are common in China.

Earlier this year, China’s consumer quality regulator found an “unusual amount” of mercury in some of its baby formula. The General Administration of Quality Supervision, Inspection and Quarantine said that the mercury, a metallic element that is toxic in high doses, was detected in several batches of Yili products during a check of baby formula products. Yili was the only company found to have products contaminated with mercury and immediately recalled defective products.

Mengniu was found to contain high levels of aflatoxin, a carcinogen, in some products.

These safety scares didn’t help the image of an industry which is still recovering from the melamine disaster. China’s dairy industry was dealt a savage blow in 2008 when infant baby formula was found to be tainted with melamine, an industrial compound used to create plastic and resin. Six infants died and and 300,000 children fell ill.

The upshot is that Chinese consumers are willing to pay a hefty premium for ‘safe’ foreign brands as they distrust the safety of local products.

Both companies have been led in the past by colourful chairmen. But are now at the vanilla stage.