Wary Fonterra will keep inching its way into China

Despite the Sanlu nightmare, New Zealand dairy giant Fonterra says it will continue to seek new opportunities in China - although it will be treading cautiously.

Its first venture into the Chinese dairy market resulted in the company being dragged into a tainted milk scandal that killed six babies and sickened thousands and ended with its $200 million investment in the Sanlu company being written off.

"We have learned important lessons from this experience and will be proceeding cautiously and in a measured way," said Fonterra spokesman Graeme McMillan.

"Fonterra remains committed to China and open to future investment opportunities, but we will not be making any significant decisions in the short term.

We are currently focused on concluding all the details of our Sanlu investment and ensuring a continued strong performance by our imported ingredients and food service businesses in China."

Sanlu Group was 43 per cent owned by Fonterra, and was valued at $470 million before the scandal. On Wednesday, it was auctioned for $182 million to Beijing dairy firm Sanyuan Foods Company.

"The bankruptcy of Sanlu is being processed in an orderly fashion under Chinese bankruptcy law and the sale of these assets is part of that process," Mr McMillan said.

"It has been widely reported that Sanyuan has been interested in acquiring the relevant assets and so this acquisition comes as no surprise."

Sanlu was the first dairy firm found to be selling contaminated milk.

Middlemen are accused of putting melamine in watered-down milk to fake protein levels. When ingested, melamine can cause kidney stones and kidney failure.