After hearing that Sanlu Group plans to declare bankruptcy, more than 400 Sanlu distributors have come to the company's headquarters in Shijiazhuang, asking for the estimated CNY1 billion they've prepaid to consumers who returned contaminated Sanlu milk powder.
These distributors, who are reported to be the first level agents of Sanlu brand, say that each of them may lose millions of Chinese yuan and face lawsuits from their second and third tier agents once Sanlu goes bankrupt, and that is why they have hurried to Shijiazhuang.
According to a Sanlu distributor from Beijing quoted by local media, Sanlu usually pays its suppliers three months after receiving raw materials from them, but it asks the distributors to prepay it before the goods are delivered. The Beijing distributor estimates that Sanlu distributors across the whole country have recalled Sanlu milk powder with a total value of up to CNY1 billion. This distributor alone has recalled Sanlu products worth about CNY8 million.
So far, the Sanlu Group has not responded to the reports of bankruptcy. However, the Shijiazhuang government has promised to refund distributors with part of the repayments before January 10, 2009.
