#Theglobaldairy: Chinese infant-formula maker plans NZ factory

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ALAN WOOD.Chinese infant milk production and distribution company Yashili International Holdings says it plans to build a 1.1 billion yuan (NZ$210 million) processing plant in New Zealand.The Hong Kong stock exchange-listed company said its board had approved the plan for establishing a manufacturing facility for production of finished products and semi-finished products, including base milk powder, in New Zealand.
The plant’s annual production capacity is expected to be 52,000 tonnes, and it could potentially be in the central North Island, possibly near Tokoroa, according to one industry expert.
Yashili has been seeking to establish further production outside China for several years and already buys milk powder from New Zealand’s leading player, Fonterra, he said.
Early last year, it began a new marketing campaign promoting its formula’s New Zealand milk powder content by adding the slogan «Genuine New Zealand, Love From Yashili» to its product.
It reported sales of NZ$322m in the six months till June, with sales of its infant formula Yashily up almost 30 per cent on the previous year.
The total investment involved in the establishment of the facility by Yashili is estimated to be 1.1 billion yuan.
Of that total 950 million yuan (NZ$181m) will be for acquisition of land and the cost of construction of the facility, and 150 million yuan (NZ$28.6m) will be working capital of Yashili New Zealand Dairy Company.
That company will be a wholly-owned subsidiary of Yashili International, which will establish and operate the New Zealand facility, expected to be completed and running in the second half of 2014.
Yashili New Zealand has submitted an application for consent for the investment to New Zealand’s Overseas Investment Office.
Yashili New Zealand had entered into a conditional purchase agreement to acquire the land for the New Zealand plant.
The land purchase was subject to various conditions provided in the conditional purchase agreement, including Yashili New Zealand obtaining an investment approval from the OIO.
Any location for the site was not detailed in an announcement by Yashili International Holdings yesterday.
Late last year another Chinese company, the Inner Mongolia Yili Industrial Group, was reported to be planning to buy Oceania Dairy to acquire the resource consents it holds over 38 hectares near Glenavy in South Canterbury, to build an infant formula plant on that site.
The Yili deal is subject to approval from the Overseas Investment Office, but if given the green light, Yili will reportedly invest $214m in the plant.
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Yashili International’s principal activities include the production and sale of pediatric milk formula and nutrition products, and also the production and sale of packing materials, according to a profile on the Hong Kong stock exchange, where the company listed in November 2010.
The chairman of the company is Zhang Lidian who, with others of the Zhang family, set up the company in 1993. It is headquartered in Chaozhou in Guangdong province, and incorporated in the Cayman Islands.
– © Fairfax NZ News

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