Mengniu apologises to Yili in defamation scandal

An Yong, a product manager from Mengniu's liquid milk division, was arrested by local police in Inner Mongolia earlier this month, where both companies are based, for spreading stories hinting one of Yili products, QQ star (pictured) might contain a potential health hazard.

In the statement, Mengniu argues that the defamation was An Yong's "individual behaviour", and neither the company nor any member of its management was aware.

Mengniu revealed that An Yong was a Yili employee before he joined Mengniu in 2005. The case also involved Beijing-based PR agency Bosse which has a close partnership with Mengniu.

Between 2003 and 2004, Mengniu said, Yili hired Beijing-based brand agency Weiwan to spread negative stories about Mengniu via mass media in 11 cities. Wewan's general manager and two other employees were later arrested, but the case never made the news.

Mengniu and Yili have been in fierce competition for a decade. The latest episode has drawn attention to the country's public relations industry.

"There have been a lot of filthiness like this, which has made PR not a respectable industry in China," said Li Yixin, executive director of Mandarin Communication.

He said the Mengniu case could be a warning to the PR industry in China and an opportunity to make changes.

"PR should get the respect it deserves," he said.