The government recently launched an investigation into the alleged monopoly practices of some foreign baby milk formula producers, which is widely viewed as an official intervention to protect domestic companies.

The prices of the baby milk powder produced by some foreign brands have increased by up to 60 percent. But this is only a symptom of the problem facing domestic producers. Foreign brands have raised their prices because of the demand for their products. Foreign baby milk formulas cost twice as much as domestic products, but Chinese parents still buy them because they believe them to be safer than local ones.

Despite the growing market for baby milk formula, domestic brands have failed to cash in on the demand because they have lost the trust of consumers after a series of serious food safety scandals since 2008, when at least six children died and thousands fell ill after consuming chemical-contaminated milk powder. Although the market for milk formula grew by 25 percent from 2011 to 2012, the sales of Mengniu, one of China's largest producers of dairy products, declined by 3.5 percent, because it was one of companies involved in the 2008 milk scandal.