The Sanlu scandal has deeply shocked China's dairy products industry. In the special testing on infant milk powder conducted by the GAQSIQ, of 491 batches of products made by 109 enterprises, 69 batches made by 22 enterprises contained melamine of different amounts. In the testing of liquid milk, the products of certain well-known enterprises contained melamine, while the products of internationally renowned enterprises were unaffected. This shows the gap between domestic enterprises and internationally renowned enterprises in exercising corporate responsibility and management, and also shows the deep-seated problems that exist in the development of China's dairy products industry.

    According to Yao Haitao, vice-president of the Mengniu Group, the annual growth of the world dairy industry is 1.5 percent, while China has maintained a 20 percent growth rate. In 2006, China's milk output was 30 million tons, ranking third in the world after India and the United States. At present, China's annual growth of milk makes up 50 percent of the global growth rate, making it the largest market in the world.

    However, China's dairy industry faces a problem of quality milk supply. China's milk source bases are characterized by small scale, low output and dispersed operations. This has created a bottleneck restricting the development of China's dairy industry, and is at the root of the Sanlu incident. According to new industry policy regarding dairy products issued by the National Development and Reform Commission, any new enterprise must have a daily handling capacity of at least 200 tons, and 30 percent of the raw milk must be from its own milk farms. At present, the self-supply milk capacity of most enterprises is less than 10 percent.

    Following the Sanlu incident, all the enterprises that produced tainted dairy products apologized publicly to consumers and recalled their products, promising that they would invest more to improve construction of dairy farms. Niu Gensheng, chairman of the board of directors of another dairy products giant, the Mengniu Group, whose products also tested positive for melamine, said that the incident was a humiliation for the dairy products industry. He said that if he could not properly handle the incident, he would resign. "Before us there are two roads – a road to death and a road to life," he said. That is also the choice facing numerous dairy products enterprises, and even the entire Chinese dairy industry.