Dairy companies become bigger
Updated: 2013-06-21 02:33
By WANG ZHUOQIONG (China Daily)
|
||||||||
The notion of "too big to fail" is becoming prevalent in the Chinese dairy industry. Pushed by increasing demands for quality and safe baby food, the government and industry members have encouraged mergers and acquisitions to create dairy giants, who are pressuring their foreign rivals in pricing power and market competitiveness.
On Tuesday, China Mengniu Dairy Co Ltd agreed to acquire privately owned Yashili International, one of the country's leading makers of infant milk formula and baby food, for $1.6 billion, making it the largest merger in the domestic dairy industry.
The merger unveils the beginning of a series of consolidations in an attempt to revive the troubled industry.
An industry insider told China Daily the Inner Mongolia Yili Industrial Group also intends to acquire Feihe Dairy and Wondersun Dairy Inc. The three companies have denied the rumor, but the insider said the offer is to secure milk suppliers of the latter two companies who have quality dairy farms in Northeastern China.
After such mergers and acquisitions, the line between Chinese and foreign brands is blurring, said Song Liang, a dairy industry analyst at the Distribution Productivity Promotion Center of China Commerce.
"The integration with international standards and levels will greatly improve the quality and safety of domestic milk powder," he said.
A number of small producers are expected to be axed in such moves. Cheng Qunshi, a nutrition and food safety expert, said that of about 120 milk powder manufacturers in China, some small enterprises have found loopholes in implementing industrial standards. Many without fresh milk suppliers and farms have difficulty in controlling the quality and safety of the raw milk they use.
However, industry analysts said making the country's dairy industry bigger does not necessarily make it stronger. Stricter quality control and supervision are keys to improving the dairy industry, Song said.
- Michelle lays roses at site along Berlin Wall
- Historic space lecture in Tiangong-1 commences
- 'Sopranos' Star James Gandolfini dead at 51
- UN: Number of refugees hits 18-year high
- Slide: Jet exercises from aircraft carrier
- Talks establish fishery hotline
- Foreign buyers eye Chinese drones
- UN chief hails China's peacekeepers
Most Viewed
Editor's Picks
Pumping up power of consumption |
From China with love and care |
From the classroom to the boardroom |
Schools open overseas campus |
Domestic power of new energy |
Clearing the air |
Today's Top News
Shenzhou X astronaut gives lecture today
US told to reassess duties on Chinese paper
Chinese seek greater share of satellite market
Russia rejects Obama's nuke cut proposal
US immigration bill sees Senate breakthrough
Brazilian cities revoke fare hikes
Moody's warns on China's local govt debt
Air quality in major cities drops in May
US Weekly
Geared to go |
The place to be |