Business / Industries

Tighter rules coming on infant formula imports

By Wang Zhuoqiong (China Daily) Updated: 2014-05-07 07:13

Tighter rules coming on infant formula imports

As of April 1,imported baby formula products had to be tagged with Chinese labels before arriving in the country. Unregistered producers will not be allowed to import to China as of May 1. Liu Junfeng / For China Daily

A move to tighten import controls on infant formula will likely curb market growth for some smaller, sub-par foreign suppliers and benefit major leading overseas producers, industry analysts said.

Only 41 foreign producers from 13 countries were approved to import their products to China, according to the Certification and Accreditation Administration. They constitute the first suppliers who registered in advance. The list will be updated based on the progress of suppliers' registration. A second cluster of suppliers and list of approved brands are expected to be announced this month, industry analyst Song Liang said.

As of April 1, imported baby formula products had to be tagged with Chinese labels before arriving in the country. Unregistered producers will not be allowed to import to China as of May 1.

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Song said the new procedures aim to raise the bar for imported formula sold in China and to eliminate foreign brands of smaller-sized original equipment manufacturing.

Foreign baby milk formulas account for 40 percent of market sales but half the market value, Song said. The new procedures are likely to push half the foreign brands, or 10 percent of the market value, off Chinese shelves, he said.

Song said the bar is not high and considerably tolerant of international brands. Eight of about 200 brands from New Zealand - including Nutricia Ltd, Westland Cooperative Dairy Co Ltd and Fonterra Ltd - have received approvals.

Wang Dingmian, former deputy director of Guangzhou Dairy Industry Management Office, said tighter controls will reduce chaos on the current infant formula market in China where there are hundreds of foreign brands.

"It is very difficult and confusing for consumers to select," Wang said. By comparison, fewer than 10 brands are available in many advanced markets, he said.

Removing smaller-sized and below-standard manufacturers benefits consumers and creates space for major and strong players to grow, Wang said. "Having fewer foreign brands but with better quality is being responsible to consumers and producers," he said.

The new registration standards will allow domestic dairy producers to catch foreign rivals; without them, foreign infant and baby formulas could generate as much as 80 percent of market volume in three to five years, Wang said.

An increasing number of Chinese consumers choose and trust foreign dairy brands. That encourages more Chinese dairies to register overseas and sell in China as an overseas product, he said.

Auditors from China's Certification and Accreditation Administration visited some major infant formula manufacturers in March as part of moves to strengthen the safety and quality of imported infant and baby formulas in China.

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