The imported milk market let an obvious statement as we cross the milk section from Carrefour Supermarket Shanghai: half the milk bricks are export issues. China realizes 25% of the international import trade of dairy products. Even if New Zealand is currently the largest exporter of milk due to its suitable land for cattle breeding, the country does not overshadow its many competitors in the West, where partnerships with China are growing.
The scandal of melamine milk change the deal
Since the resounding scandal of melamine milk in 2008 follow-up by another expired-milk scandal in 2013, Chinese citizens do no longer trust their own country’s production and rather choose imported milk, if possible travel themselves abroad to bring back some liters from dairy farmer countries. These scandals stretch wide open the milk export into the territory; while Hong Kong, Australia, and New Zealand were overwhelmed of Chinese consumer purchasing milk items until leading them to stock shortages, European dairy industries prepare their marketing offensive.
Since 2015, two major Normandy dairy companies have exported their infant milk to China: Maîtres Laitiers from Cotentin French department and the cooperative of Isigny Sainte Mère. Both can attest to their world-renowned expertise in dairy products. In Isigny, a new unit was built at the factory to meet the demand to export infant milk powder and annually produces up to 30,000 tons of powder for its Chinese partner Biostime Pharma: an investment with positive consequences , with the hiring of a hundred additional employees and the production increase of 20% for the dairy farms supplying it. The export milk powder represents an annual turnover of 119 million Euros, nearly half of the total turnover of the cooperative.
“Maîtres Laitiers” are not left out: they also built a new production unit to supply their Chinese partner Synutra, commissioned in 2017, which aims to deliver 690 million milk packs a year, an astronomical figure that reflects China’s lack of self-sufficiency in this branch of agribusiness.
Quality and know-how, key points of success
Cooperative Isigny Sainte Mère target quality over quantity by focusing on organic and label of protected origin, a contemporary speech that seduces and reassures consumers, always on the lookout for the next food scandal. The ultimate proof of its receptivity to the Chinese market, it turns to e-commerce and plans to sell more of its products through the Internet.
Many companies wishing to export are facing the ambitions of their Chinese partners and feel rightly reluctant to reveal their manufacturing secrets. It is essential for a company to be able to attest the quality of its products and unique manufacturing know-how, in order to maintain an advantage over the many local plagiarisms that will undoubtedly develop.
The truth behind massive import
But China might well decide to become self-sufficient in a few years, to overcome its dependence on milk exporting countries: a perspective already worrying producers, as the transfer of technology becomes a recurrence.
After the creation of the C919, first 100% Chinese plane, and of the two TGV CR400 fully assembled in China, plus the will of the authorities to obtain a national saddle horse breed using imported horse breeds, no doubt that China will decide to import cows from abroad in order to improve her milk market and own national dairy product !
The Chinese government does not forget the importance of winning back its consumers to deploy its national market, and therefore is grouping farms to increase yields and trying to improve the qualitative image of its production.
China woke up, world is trembling
But China does not stop there: a policy of aggressive conquest was sets up, buying companies or investing in all dairy farmer countries, land and factories of each sector. China invested in wine by buying vineyards in Bordeaux, in tourism with the mediatized acquisition of Club Med and in the food industry with the purchase of cultivable land.
Its grip gets even more obvious on its direct neighbors Australia and New-Zealand, where it has bought farmland – including the largest dairy farm in the country bought by the Chinese company Moon Lake, playing on his role as a major economic partner.
With the dairy industry accounting for one-quarter of the country’s exports, the pressure on this crucial economic sector for New Zealand can make everything collapse. China has elaborated an incredible trade tactic by creating a strong demand for the time to build up stocks and abruptly withdrawn from the market. Once the New Zealand agricultural cooperations shut down, China was able to break prices to buy cheaply the surplus milk production of his neighbor.
These strategies are very edifying for any businessman wishing to deal with China. Trade with China needs a wide preparation!
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