Nestlé's China business, once a pioneer for Western companies entering the market since 1908, has collapsed into its worst-performing major market, with sales falling 10.2 per cent last year. The Swiss food giant now faces mounting anger from Chinese distributors who claim they are owed hundreds of thousands of dollars in reimbursements for unsold goods. One distributor in Hebei province, Feng Liqing, says Nestlé owes her approximately $147,000 for infant formula she cannot sell.

Former and current Nestlé executives describe a practice of "channel stuffing" — oversupplying distributors with products to hit internal sales targets, particularly in infant nutrition. The strategy created a short-term revenue boost while alienating distributors who were forced to sit on excess inventory. The company expanded from hundreds to thousands of distributors, with some being asked to pay prices above prevailing retail rates. This coincided with leadership crises: CEO Mark Schneider was ousted in 2024, and his replacement Laurent Freixe was fired a year later for an affair with a subordinate.

New leadership is now attempting to reverse course. Kais Marzouki, appointed last April, has reduced the number of distributors and is trying to rebuild consumer demand before pushing products. Nestlé expects stock levels to normalize by mid-2026. For distributors still chasing payments, the turnaround offers little consolation — Feng plans another trip to Nestlé's Beijing headquarters demanding an explanation.