Denmark’s dairy giant Arla Foods became a strategic investor in Mengniu Dairy Co. Ltd. (2319.HK), China’s largest milk producer by sales volume, after buying a 5.9 percent stake at a price of 1.7 billion Danish crowns ($289 million) late last week.

The deal makes Arla Foods, the largest milk producer in Europe, the second-largest shareholder in the company after state-owned COFCO Corp.

“Arla Foods will get involved in Mengniu's daily operations, send professionals to work with Mengniu employees and help Mengniu update dairy technologies and improve its management system”, Cofco chairman Ning Gaoning said in a statement.

The investment is expected to increase Arla's turnover in China five-fold by 2016 from 700 million Danish kroner last year, Fox business said.

According to the official Xinhua News Agency, a slew of Chinese and Danish companies had signed cooperation agreements during President Hu Jintao's visit to the Nordic country from last Thursday to Saturday.

Reuters said China is the world's largest formula market and is expected to overtake the U.S. as the largest dairy market by 2020, attracting an increasing number of global dairy producers.

But local dairy producers are distrusted by the public after years of scandals such as the 2008 melamine crisis that killed 6 babies and sickened at least 300,000.

According to Reuters, in the latest scandal, several batches of Inner Mongolia Yili Industrial Group Co. Ltd. (600887.SH) baby formula products were found to contain excessive mercury, which could be toxic if consumed in high quantities.

The cooperation can bring in advanced management experience, but problems deep-rooted like quality control in milk production that cannot be solved by the deal will still mainly rely on our own companies and authorities, Song Liang, a dairy industry analyst at the Distribution Productivity Promotion Center of China Commerce, told the official Global Times.