BEIJING -- Northwest China's inland city Hohhot, home to China's two dairy giants Mengniu and Yili, will set up a national-level laboratory to monitor products of the two scandal-hit companies, Hohhot Mayor Qin Yi said Wednesday.

"We will use the lab to supervise dairy products produced by the two companies nationwide and make sure they provide qualified products to consumers," Qin said.

Qin said the government of Inner Mongolia autonomous region has approved Hohhot's plan of building the lab and the city government is now in contact with China's Ministry of Agriculture and national quality inspection watchdogs for the details.

The mayor did not disclose when the lab will be established and how much the government will spend on it.

Qin said the Mengniu Dairy Company and Yili Industrial Group have more than 100 manufacturing and processing plants across China, taking large market share of the country's combined production of liquid milk and milk powder.

China's dairy industry has been mired in controversy since a notorious scandal in 2008 in which baby formula produced by the Sanlu Group, a domestic dairy company, was found to be tainted with melamine, an industrial compound used to create plastic and resin. The tainted formula led to the deaths of six infants and sickened 300,000 children across the country.

Scandals involving the Mengniu and Yili have further cast a blow on consumers' confidence in Chinese dairy products.

In December, 2011, products manufactured by Mengniu were found to contain high levels of aflatoxin, a carcinogen, according to the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ).

Last June, an "unusual amount" of mercury, a metallic element that is toxic in high doses, was found in baby formula produced by Yili.

Apart from tightening quality supervision, the Hohhot government will also increase investment and encourage private capital in building grazing land and dairy farms to ensure milk quality from the source, said Qin, on the sidelines of annual session of the 12th National People's Congress, China's top legislature.