New batch of dairy brands recommended

By Liang Fei Source:Global Times Published: 2014-1-22 23:23:01

A man chooses infant formula for his baby in a supermarket in Xuchang, Central China's Henan Province. Photo: IC

The China Dairy Industry Association (CDIA) announced Wednesday the second batch of the association's recommended baby formula brands. Twelve baby formula products from six domestic dairy companies were promoted in a press conference held in Beijing Wednesday.

The six companies are Zhejiang Beingmate Technology Industry and Trade Co, Beijing Sanyuan Foods Co, and four regional dairy brands.

Boosted by the news, shares in Beijing Sanyuan rose 4.15 percent on the Shanghai Stock Exchange on Wednesday, compared with an overall gain of 2.16 percent in the Shanghai Composite Index. Shenzhen-listed Beingmate also saw its share price rise 3 percent on Wednesday.

In September 2013, the CDIA announced the first batch of recommended baby formula products in Beijing, promoting products from six companies, including leading dairy producers Mengniu and Yili.

Several regional brands were also named in the CDIA's recommendation, such as China Huishan Dairy Holdings Co, whose business mainly focuses on North China, and Xi'an Yinqiao Biological Science and Technology Co, whose business mainly targets Northwest China.

The two main requirements in choosing recommended brands are that they mush have domestic milk sources and must have suitable production techniques, Song Liang, a dairy analyst at the Distribution Productivity Promotion Center of China Commerce, told the Global Times on Wednesday.

The recommended companies have been called "the National Team" of China's dairy sector by media reports, given the CDIA's government background. But the association said after the first recommendation event that there is no such thing as a "National Team" in the sector.

The CDIA was founded in 1994, backed by the then Ministry of Light Industry, which is now the Ministry of Industry and Information Technology (MIIT). Some industry insiders said that the companies recommended by the association may get government support in the future.

A 21st Century Business Herald report said Wednesday that companies not listed in the recommendation have been very active in finding ways to get into future lists.

"There were no supporting policies after our products were recommended," an official from one of the dairy firms whose products were recommended in the first batch told the Global Times Wednesday.

The official, who wished to remain anonymous, said that the company did not expect too much government support and would rely on "market mechanisms" to succeed.

"The CDIA aims to promote quality products from these companies and rebuild consumers' confidence in domestically produced products," Chen Lianfang, a dairy industry analyst at Beijing Orient Agribusiness Consultants, told the Global Times on Wednesday.

However, Han Fengye, a 28-year-old white-collar worker in Beijing who is expecting a baby in July, said that she does not have much trust in the association's recommendation. "Word of mouth is more trustworthy," she said.

Chen also noted that it is not very likely that the government will roll out supporting policies to the recommended companies.

Competition among domestic baby formula producers is getting fiercer.

In December, China's food and drug authority released a set of tighter regulations for domestic infant formula producers, which may force one-third of infant formula producers to leave the sector, according to experts.

In a draft plan to promote consolidation in the baby formula sector, the MIIT said that around 60 percent of baby formula producers will have to leave the sector or merge with other companies by 2018.

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