According to the two companies' semiannual reports, Yili's revenue during the first half of this year was 14.69 billion yuan, 200 million yuan more than Mengniu's over the same period, according to Weekly on Stocks.

China's dairy industry was hit heavily when melamine contamination of powdered milk of the country's then-No. 3 dairy, Sanlu, killed at least six infants and put thousands of babies in hospital in 2008.

The industry has been struggling to recover since and, according to Melbourne-based Dairy Australia, demand in China is still vigorous and is likely to increase as the country's incomes rise.

"It is very na?ve for companies to do this. A mature brand, especially in food production, should pay more attention to its product quality than just maintaining a brand-name," Yu Mingyang, a professor of brand marketing at Shanghai Jiaotong University, told the Global Times.

Guo Huimin, vice president of the University of International Relations, said these marketing tactics resemble a virus unleashed on the market, which not only destroys the reputations of both companies in the eyes of the public, but also disturbs the order of the market economy.

It is time for the whole industry to cooperate and reassure consumer confidence, instead of spreading rumors, Yu said.

Rules should be put in place to regulate marketing practices and companies should attach importance to ethics and image, Guo said.