The company has suspended production of milk products, and has removed, sealed, and recalled all substandard products, it said in a filing to the Shenzhen Stock Exchange on Monday. It said it will unconditionally refund consumers that bought these products.
“Maiquer will actively cooperate with the regulators on the investigation, and will not reject or avoid responsibility,” the company said, noting that it will conduct an earnest self-inspection to identify problems which led to substandard products being sold and rectify these issues.
The company said that it offers a sincere apology to consumers and relevant parties impacted by the incident, stressing that it will improve compliance and management to earnestly implement its social responsibility.
Dairy products accounted for around 50 percent of Maiquer’s revenue, and that the incident will affect its milk business during rectification and accordingly have phased impact on the company’s revenue.
Maiquer has been under investigation for the illegal use of food additives, a local market regulator in East China’s Zhejiang said on Sunday, noting that it will deal with the case seriously in accordance with the law, announcing investigation details as soon as possible after further results are made public.
Zhejiang officials recently confirmed that two batches of Maiquer milk were found to have excessive amounts of propylene glycol. Preliminary investigation and analysis show that the detection of propylene glycol in Maiquer pure milk was caused by the excessive use of food additives and flavors in the production process.
According to Chinese food law, propylene glycol is an approved food additive and a permitted solvent in synthetic food flavors and food flavors, but the country has set a maximum usage limit, while the additive cannot be used at all in pure milk.
Maiquer apologized in a statement on Sunday afternoon, saying that “unqualified products were due to failure in cleaning up the product tank line of modulated milk,” after the preliminary investigation of the company.
“The unqualified products are caused by the company’s failure to effectively clean the residual modulated milk in the product tank line during the production switching process of pure milk and modulated milk, resulting in legal food additives, including propylene glycol, from modulated milk and ingredients into the pure milk,” read the company statement.
“We will cooperate with relevant government departments to further investigate on the case, and will announce the result to the public in a timely manner,” it said.
The local market regulator has already sent a special investigation team to the company, which is based in Northwestern Xinjiang Uyghur Autonomous Region, to conduct inspections, and have urged the enterprise to immediately stop milk production, and promptly remove, seal, and recall substandard products.
In light of the Maiquer case, the State Administration of Market Supervision has also organized a sampling inspection among 23 batches of samples of pure milk produced by 14 companies with high market shares, propylene glycol was detected in six batches from Maiquer, with between 0.264 grams per kilogram and 0.363 grams detected per kilogram.
The State Administration for Market Regulation asked the Xinjiang market regular to identify the extent Maiquer’s violations as soon as possible, investigate and punish the firm strictly according to the law, and publish the investigation and punishment results in a timely manner.
Maiquer’s net profit shrank 65 percent last year from the year before to 18.5 million yuan ($2.8 million), according to the report. Revenue, though, jumped 30.9 percent to 1.1 billion yuan ($164.3 million).
“If the company is suspected of major violation of laws, the China Securities Regulatory Commission may launch an investigation into Maiquer,” Jiemian News reported, noting that the company may be forced to delist according to Chinese securities law.mil
