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Foreign competition back to Chinese milk market
Last Updated: 2013-11-25 17:02 | CE.cn
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By Li Hongmei

Japan's Meiji Dairy Corp. announced on Nov. 15 its intention to sell milk and yogurt drinks in China, adding that sales will begin in eastern China on Dec. 1. The supply will be provided by its new factory in Suzhou in Jiangsu province, the company noted.

Foreign enterprises entering the Chinese pasteurized milk market have dealt a fresh blow to local dairy brands, which recently faced a shortage in their fresh milk supply following a halt in imports of dairy products from the Fonterra Cooperative Group Ltd., a leading New Zealand-based multinational dairy company, earlier this year.

Due to insufficient milk supply and the dairy cows' seasonal production adjustment, the supply of fresh milk has declined on the mainland since April, triggering a surge in fresh milk prices there. An accumulative rise of 16.5% in fresh milk prices has since been recorded, according to International Finance News, a division of the People's Daily.

After the Fonterra incident - in which the dairy giant's products were found tainted by bacteria, New Zealand resumed its dairy exports to China, and the export scale has returned to normal levels, stated New Zealand Economic Development Minister Steven Joyce, who is currently visiting Beijing.

Meiji's investment came amid the recovery of Chinese consumer trust in imported milk, Distribution Productivity Promotion Center senior researcher Song Liang remarked. In addition, Japan's refrigeration techniques are widely believed in China to be more advanced than those used in the Chinese market, Song noted.

Meiji is aiming at generating 700 million yuan (US$114 million) in revenue each year by 2020 from their new venture in China, the International Finance News reported.

As well as Meiji, dairy companies from Germany, New Zealand and France have made inroads into the Chinese market in recent years. Compared with foreign enterprises, local dairy companies, such as Mengniu, Yily, and Bright, showed weaker market competitiveness due to their less effective processing and packaging techniques, Song said.

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