This scandal is the reason Dutch supermarkets still limit the amount of baby formula that can be bought per customer, so many Chinese trying to buy up large amounts that there was a risk many stores would run out.
From what I know, it is because of export control and regulation.
Nutricia, the Dutch milk powder company, cannot easily sell Dutch milk powder to China because import/export regulations don't easily allow them to do so. So they opened a store in China. But because of Chinese food regulations they cannot use the original formula. But consumers distrust the Chinese store because the formula has been altered. So people keep buying "real" Dutch milk powder fron smugglers.
I don't know if the factories are manufacturing enough, or capable of ramping up to do so. It's a huge increase in demand. I heard of similar problems in Australia.
Because it's baby formula, produced here, and rather vital. Government is _not_ going to stand idly by if it disappears from stores because some other country bids more.
"Two people were executed, one given a suspended death penalty, three people receiving life imprisonment, two receiving 15-year jail terms,and seven local government officials, as well as the Director of the Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), being fired or forced to resign"
Stupidly enough, that scandal was partially to blame on the government price caps on milk.
Farmers' inputs were getting more expensive but they were prevented from raising prices. So some farmers were more likely to resort to such poisonous fraud.
Of course, the foreign milk products they import these days are even more expensive.
When bought in bulk, milk isn’t priced by the liter because it is too easy to water it down. Instead, it is priced by kilograms of protein.
Measuring protein is hard, so they measure nitrogen instead (https://en.wikipedia.org/wiki/Kjeldahl_method#Conversion_fac..., https://en.wikipedia.org/wiki/Dumas_method#Advantages_and_li...). Melamine (https://en.wikipedia.org/wiki/Melamine) is cheap, rich in nitrogen, and, unfortunately, poisonous.