China\u2019s market regulator has ordered infant formula makers to test for cereulide, a toxin that has triggered precautionary recalls worldwide by some of the largest food companies.<\/p>\n
Producers must strictly enforce controls on raw materials and product releases, the State Administration for Market Regulation said in a statement on Thursday. Local governments were instructed to strengthen oversight of safety and quality standards, though no poisoning cases linked to infant formula have been reported in China.<\/p>\n
The urgency stems from Nestle SA\u2019s discovery of cereulide in baby formula traced to ARA oil from a single company it didn\u2019t name. People familiar with the matter have since identified the supplier as China\u2019s Cabio Biotech Wuhan Co., sending its shares plunging 16% this year.<\/p>\n
Cabio has grown into one of the world\u2019s biggest producers of ARA, supplying Nestle, Danone SA, and local formula makers such as China Feihe Ltd. and Junlebao Dairy Group Co. Its rise has fragmented the global infant formula supply chain, breaking Dutch chemical maker DSM-Firmenich AG\u2019s former monopoly on the ingredient.<\/p>\n
China\u2019s stricter oversight may work to keep investor and consumer confidence intact, given the critical role of a Chinese supplier in the global infant formula industry.<\/p>\n