In recent years, frequent and unsolved dairy product safety incidents in China made many consumers choose imported dairy products. In particular, parents of infants tend to purchase imported milk powder. From January to July in 2016, China imported 1,383,000 tons of dairy products with an increase of 29.1% YOY. The import value was USD 3.96 billion, increasing by 13.5% YOY.
In 2015, China imported 176,000 tons of infant formula milk powder, growing by 55,000 tons with an increase of 45% YOY compared to 121,000 tons in 2014. The import value of infant formula milk powder was USD 2.47 billion with an increase of 59.5% YOY. Holland, Ireland, France and New Zealand mainly export their infant formula milk powder to China.
In retail markets, many Chinese purchase imported milk powder. The domestic raw milk serving as the raw material of China dairy industry is twice the price of the imported one. The costs of various dairy products in use of domestic raw milk are obviously higher than those of imported products. Therefore, some Chinese dairy product manufacturers lower their production costs and enhance competitiveness through overseas acquisitions.
From 2013 on, there are 4 pieces of investment over CNY 1 billion in foreign countries by Chinese dairy product manufacturers. For example, in 2013, Yili invested CNY 3.2 billion to build a production base in New Zealand. Yashili spent CNY 1.1 billion in the construction of dairy product base. In 2014, Bright Dairy & Food Co., Ltd. purchased 56% stock right of Tnuva, the largest dairy enterprise in Israel with CNY 15.3 billion. In 2015, BIOSTIME spent CNY 6.3 billion to purchase 83% stock right of Swisse in Australia.
According to CRI, China’s per capita consumption of dairy products in 2015 was only about one third of the world average level, and there was still room for growth. As Chinese economy develops and residential income increases, demand for dairy products as well as imported dairy products in Chinese market will keep increasing. There will be many opportunities in Chinese market for global dairy manufacturers.