HOHHOT, Inner Mongolia: The two mainland dairy giants yesterday called upon Hong Kong consumers to have confidence in their products as their milk has passed stringent quality tests.

With efforts of tightening control on sources of raw milk supply, they said, the possibility of melamine being added during the process has been eliminated.

The top management, speaking to the media at their headquarters in the "milk capital" of Hohhot, said they are confident that sales will return to the same level as before the milk scandal by early next year.

In September, the industrial chemical melamine was found in many mainland-made dairy products and baby formula, including those manufactured by Inner Mongolia Mengniu Dairy Group and Inner Mongolia Yili Industrial Group.

The tainted milk has killed four people and affected more than 50,000.

Business of the two diary giants has been hard hit. Yet two months after the scandal, Mengniu's sales in the country have recovered to about 80 percent of the level prior to the incident, while those of Yili have reached almost 90 percent.

"Owing to the stringent measures in raw milk management, we believe that sales can be restored to the same level as before by the end of this year, or, by the latest, the first quarter 2009," said Yao Haitao, deputy president of Mengniu.

Yili Vice President Wei Lincong expects sales to completely recover by the Chinese New Year.

Both manufacturers admitted that the milk scandal will affect the full year results, but they declined to forecast, as the impact has not been assessed.

Yao denied some media reporting that Mengniu would lose more than 6 billion yuan. "The loss must be even less than three billion yuan," he said.

As the incident revealed problems in raw milk safety control, the Hohhot Municipal People's Government has established a third-party supervising body to monitor the quality of milk produced locally.

According to the Hohhot government, 21,000 tons of tainted milk in Inner Mongolia was dumped, and affected raw milk suppliers were given subsidies of about 49 million yuan.

In order to concentrate all raw milk suppliers in designated places for better control and management, the Hohhot government aims to build 1,500 pastures which house 500 to 1,000 cows each by 2010. Each pasture costs up to 1 million yuan.

Mengniu has also built seven mega-size pastures, which each house 10,000 cows. Five of them have commenced operation.

It targets to build 27 mega-size pastures in five years. "With the current progress, we should attain the goal in less time," Yao said.

Since October, Mengniu's top management decided to cut their salary by 30 to 50 percent to show their responsibility in the milk scandal.

"We found the main cause of the incident is due to the management problem, so we are always willing to take the social responsibility," the deputy president said.

(HK Edition 11/27/2008 page1)