Following the government’s new measures, considered the strictest in history, many Chinese domestic dairy firms might be forced to withdraw from the market and make way for overseas brands, according to experts in the dairy industry as cited in the Economic Information Daily.
The China-produced infant formula may face a tougher challenge in the government’s attempt to enhance confidence in buying locally-produced formula.
In December last year, the China Food and Drug Administration announced strict rules to regulate the production of infant formula. In the meantime, the administration has also restricted the source of milk and ranches.
If baby formula manufacturers fail to obtain a production license by May 31st this year, they will not be allowed to continue production or sell infant formula.
A third of the 127 registered domestic producers have been granted such a license, while five were denied, with dozens of companies having filed an application for postponing the examination or failing to submit applications for the license.
It is estimated that a quarter of China-based dairy firms are set to bow out from the market.
Sources further revealed that many did not pass the examination because they had failed to meet the requirements for equipment upgrades. Upgrading equipment is costly and unaffordable for smaller firms.
Further, it is more difficult for smaller firms to ensure their milk source.
The Certification and Accreditation Administration (CNCA) has released the first batch of the names of foreign formula producers that have been given the green light to sell their formula in China.
The first batch of foreign producers on the list are 41 formula manufacturers from 13 countries-Ireland, Austria, Australia, Poland, Denmark, Germany, France, South Korea, the Netherlands, Spain, Singapore, New Zealand and the United Kingdom.
This number rose to 49 from 16, on May 6 and the list will be updated at any time based on the applications filed by foreign formula producers.
Those who are not on the list will not be allowed to sell their infant formula in China from May 1 unless they are registered with the CNCA.
Data also showed that China’s current milk powder market sales touched 40 billion yuan (US$6.36 billion), with foreign brands taking up over 60% of the market share, jumping from 30% five years ago.
Source: Want China Times