Joint ventures make inroads into China's infant formula market
- By Joint ventures make inroads into China's infant formula market
- 20 Jan 2014
The profitable baby formula market in China recently saw many new investors partnering up with foreign brands in the hope of grabbing a market share from domestic companies.
The Taiwanese food giant Tingyi operating on the mainland under the brand name Master Kong recently signed a strategic cooperation agreement with Japanese powdered milk manufacturer Wakodo to set up a joint venture in Shanghai that imports baby formula, Beijing Business Today reported.
Market sources said Wakodo will hold 55% of the shares of the new company, which will start operations in 2014, while Master Kong possesses 45%, according to the newspaper.
Meanwhile, the New Hope Group, a Chinese business juggernaut in the dairy, animal feed and meat products sectors, has revealed that it plans to invest in Synlait Milk in New Zealand, contracting the latter to develop and produce baby formula for the Chinese market.
"The Wakodo-Master Kong and Synlait-New Hope joint ventures were formed because Chinese consumers prefer foreign baby formula brands," China Investment Consulting's food sector researcher, Jian Aihua, told the business daily.
In China, foreign brands normally face a marketing challenge due to a lack of distribution channels. Working with domestic enterprises could resolve this problem, Jian noted.
The researcher also pointed out that China is growing into one of the world's largest powdered milk consumers due to the huge demand for baby formula.
Official data shows that the total value of baby foods sold on the mainland in 2010 reached 42 billion yuan (US$6.9 billion), and 36.8 billion yuan (US$6 billion) was the turnover from baby formula.
It is predicted that the turnover of China's baby formula will surge to nearly 80 billion yuan (US$13 billion) in 2015.
Michael Boddington from Asian Agribusiness Consulting (AAC) has been involved in agribusiness in Asia since 2000. AAC has office both in Vietnam Ho Chi Minh City and China Beijing. So AAC has a thorough understanding of the Viet Nam and China aqua industry and produces up-to-date research reports on the market. We can offer insights on supply and demand trends and comments on the future structure of Asian agribusiness. If you would like to know more please email This email address is being protected from spambots. You need JavaScript enabled to view it.This email address is being protected from spambots. You need JavaScript enabled to view it.
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