Abstract
Danone, the French food giant has a longstanding presence in China. It entered the Chinese market as a precursor as early as 1987. However, its interest into China’s infant formula market was quite recent. In 2007, Danone acquired International Nutrition Co., Ltd., which possessed the brand Dumex, one of the leading infant formula brands in Asia. Thanks to Dumex, China has become the largest market for Danone in baby nutrition, accounting for 4–5 % of its total company sales. A series of new regulations issued by the government sent a clear signal that Chinese authority was set to consolidate the infant formula industry and provide support for big domestic firms. The worsening regulatory environment and intensifying competition made Danone realize that it could no longer rely merely on Dumex. The company saw Dumex’s sales tumble as a result of the scandal.