China Mengniu signs with European dairy giant

China Mengniu Dairy Co Ltd, one of the country's leading dairy product manufacturers, announced that it has entered a long-term strategic cooperation with European dairy giant Arla Foods, Securities Daily reported on Monday.

Arla Foods will invest 2.2 billion HK dollars ($283.5 million) for a 5.9-percent stake in Mengniu, according to a statement on the website of China National Cereals, Oils and Foodstuffs Corporation (COFCO).

COFCO, China's largest food manufacturer and trader, is Mengniu's largest shareholder. The investment will make Arla Foods Mengniu's second largest strategic shareholder.

Arla Foods will be involved in Mengniu's daily operations, send professionals to work with Mengniu employees, help Mengniu update production technology and improve its management system, COFCO Chairman Ning Gaoning said, according to a news report from Xinhua News Agency.

Sun Yiping, chief executive of Mengniu, said that Mengniu hopes to learn from the experience of Arla Foods to reach international dairy standards.

Arla Foods is a world leader in dairy farming, pasture management, research and development, quality management and production processes.

The deal is the largest international cooperation in China's dairy industry so far, said Yang Gang, deputy director of the General Administration of Quality Supervision, Inspection and Quarantine.