Two Chinese milk powder makers reportedly included in a group of companies that are set to receive official funding support told the Global Times Sunday that they are still waiting for official confirmation.
They told the Global Times on condition of anonymity that industry authorities are expected to have a meeting on Saturday and publish the results later.
A group of major domestic milk powder makers – including Inner Mongolia Yili Industrial Group Co, China Mengniu Dairy, Heilongjiang Wondersun Dairy, and Feihe International Inc – are set to get 30 billion yuan ($4.9 billion) in official funds to support sector consolidation, the official China Business Journal said Saturday, citing an unidentified source.
Authorities have said they want to consolidate the domestic milk powder sector to increase the ability of companies to compete with international rivals who dominate the lucrative premium end of China’s $12.4 billion infant formula market.
The milk powder firms would gain support in the form of government subsidies, funds from China Development Bank and favorable tax policies, the China Business Journal said. The total amount would be about 30 billion yuan, it said.
Milk powder is a sensitive topic in China after a 2008 scandal involving milk tainted with melamine led to the deaths of at least six infants and made many thousands ill.
That hit the reputation of domestic dairy firms and boosted the market share of imported brands such as Danone SA, Nestle SA, Mead Johnson Nutrition Co and Abbott Laboratories.
Last month, the country’s price regulator handed down record fines to mostly foreign milk powder makers for price-fixing practices.
China’s Ministry of Industry and Information Technology has previously released a plan to slash the number of domestic infant formula firms in the highly fragmented market over the next five years to 50 from about 200 now as it looks to create stronger sector leaders.
Source: NZ Week
