The Chinese government may announce new incentives for businesses in its dairy sector. In preparation, major Chinese dairy companies are expanding; often through acquisition. Shanghai Bright Holstan, a subsidiary of Bright Dairy & Food Co. has decided to invest 450 million yuan (US$73.3 million) to build a demonstration dairy farm in Anyang, Henan and Bright Dairy & Food is investing an additional 248 million yuan (US$40.4 million) in a second demonstration dairy in Heilongjiang province. Inner Mongolia Yili Industrial Group is investing $50 million in Hong Kong based dairy China Huishan Dairy Holdings in order to secure a supply of milk. Shanghai Pengxin gained approval from Chinese regulators to buy a controlling stake in Synlait Farms, a 4,000 hectare dairy farm in New Zealand. The purchase will be made through SFL Holding in which Pengxin owns 74%. In 2012 Pengxin purchased 16 dairy farms in New Zealand totaling 8,000 hectares and 16,000 cows. By 2017 China’s dairy market is expected to reach US$10.8 billion, however domestic supply will likely fall 15% – 20% short of demand forcing many Chinese dairy companies to invest overseas.
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