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Sanyuan's May sales soar after purchase

Hebei Sanyuan Foods Co, the dairy firm that bought most of the assets of Sanlu Group, China's largest milk powder producer before its bankruptcy in the melamine contamination scandal, yesterday reported that its sales for the month of May were equal to its revenue for the combined January-April period.

Gao Qingshan, general manager of Hebei Sanyuan, said the firm's revenue in May hit 70 million yuan (US$10 million).

"Our daily milk powder output reached 24 tons, or 80 percent of the total production capacity of Sanlu's former factories, and the daily output of liquid milk amounted to 300 tons, 65 percent of capacity. Production will be further expanded based on market response," he said.

He said within three years the firm is confident of meeting its goal of being as dominant in the market as Sanlu was.

Hebei Sanyuan received capital from Beijing Sanyuan Foods Co to buy the core assets of Sanlu Group Co in March. Previously Hebei Sanyuan had leased the plants. Six of its seven factories involved in production now were formerly owned by Sanlu.

Gao said consumers in Beijing would see Sanyuan milk products produced by Hebei Sanyuan, based in north China's Hebei Province, in July.

Previously, Sanyuan products sold in Beijing were all from subsidiaries of Sanlu Group Co in Beijing.

"Our products are sold to 13 provinces. But entering the market in Beijing is very important for the market recognition of our products," he said.

The firm was eyeing the high-end market for milk powder products in Beijing.

Hebei Sanyuan bought Sanlu's core assets at an auction in early March for 616.5 million yuan.

Gao said 2,200 of the 2,500 Sanlu employees on the payroll had been re-employed in Sanyuan factories. The firm would try to create jobs for the rest of the workers before October.

"Sanyuan plans to establish 300 retail dairy outlets, and set up a dairy farm this year, which would create 800 to 900 jobs," Gao said.

Sanlu was one of a handful of companies whose products were found tainted with melamine, an industrial chemical used in the manufacture of plastics and fertilizer, which was added to watered-down milk to artificially boost protein content.

The milk was blamed for the deaths of six babies and urinary problems in almost 300,000 others last year.


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