Swiss food giant Nestlé says it has launched an enquiry into practices at a subsidiary in China accused of underpaying its suppliers for at least ten years.

The accusations against the Nestlé Shuangcheng factory in the northern cattle breeding province of Heilongjiang surfaced in the Chinese press.

The English language version of the People’s Daily Online carried an article on Tuesday quoting local dairy farmers as saying it was “an open secret” that Nestlé had been squeezing their profits.

Farmers claim officials at the plant cheat them over the weight of their milk, and deem the milk to be of lower quality than it really is, in order to pay less for it.  

The website says the Shuangcheng city government helped Nestlé achieve a monopoly position in the local milk market because it is the town’s top taxpayer. The city government also has a nearly three per cent stake in the factory.

A spokeswoman for Nestlé China told the AFP news agency on Wednesday that the company did not cheat the farmers.

“We are taking these reports very seriously, and have already opened an enquiry, jointly with the local authorities,” she said.

"Nestlé does not tolerate such practices, and will take immediate steps once we have clarified the problem,” she added.

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