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China Mengniu Profit Gains as Foreign Tie-ups Boost Sales

China Mengniu Dairy Co., the country’s largest dairy producer, increased first-half earnings 16 percent as tie-ups with foreign milk producers helped reassure customers its products were safe. Shares surged.

Mengniu turned to France’s Danone SA and Denmark’s Arla Foods amba to win back confidence from Chinese consumers after a series of food safety scandals hammered sales of domestic dairy products. Mengniu also made deals to strengthen control of its supply chain and expand its infant formula business. The company agreed to buy a stake in raw-milk producer China Modern Dairy Holdings Ltd. in May to gain greater control of milk supplies.