New regulations enacted by the Chinese government will require all foreign dairy companies to meet China’s safety standards and register with the General Administration of Quality Supervision, Inspection and Quarantine. China’s quality monitoring bureau has granted approval to 1,000 foreign producers, of which 41 are infant formula producers from 13 countries. It is estimated that 50% of smaller foreign manufacturers of milk powder that do not have research capabilities will be refused entry to the Chinese market. As a result, large foreign milk producers such as Danone, Wyeth, and Mead Johnson will get a bigger market share causing tougher competition for domestic companies. During the first two months of 2014, 301,000 tons of milk powder from foreign manufacturers was bought by Chinese consumers – 79.3% above the same period in 2013. Domestic Chinese companies are responding by increasing their focus on marketing, research, and mergers and acquisitions to strengthen their position in the market.
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