The merging and reorganization of China's milk formula enterprises are good for the development of the industry, said an article in the China Business News (excerpts below).

The Ministry of Industry and Information Technology submitted a reorganization plan for dairies producing milk formula to the State Council to reduce the more than 120 domestic enterprises to about 50.

After the melamine scandal was exposed in 2008, foreign brands gained a major share of the domestic market. Chinese brands, up to now, struggled to regain consumer confidence.

But, despite the plans to reorganize, complicated factors remain.

Small producers lack the necessary supervision and some large-scale State-owned dairy enterprises "abducted" supervisors to draft industrial standards.

Any upgrading in the sector must be accompanied by an improvement in supervision and administration.