New Zealand-based Fonterra ‘highly confident’ in Chinese market
Published: Jun 26, 2023 06:50 AM
Photo: Courtesty of Fonterra

Photo: Courtesty of Fonterra

China is seeing a gradual recovery from the COVID-19 pandemic since it optimized its epidemic response, and this can be seen in dairy product consumption, a top executive from New Zealand-based dairy giant Fonterra Co-operative Group told the Global Times on Sunday.

The comments came as New Zealand Prime Minister Chris Hipkins started his visit to China on Sunday, the first visit by a New Zealand prime minister to China since 2019. Hipkins brought a business delegation of 29 representatives from various fields and businesses, including Fonterra. 

Teh-han Chow, Greater China CEO with Fonterra, said the company has been eagerly anticipating the visit by Hipkins, and believes that it will bring positive results for the bilateral relationship, with more practical economic cooperation expected.

"We're forecasting that dairy demand in China will gradually strengthen over the course of fiscal year 2024 as China's economy continues to recover," Chow said.

"We are highly confident in the future of the Chinese market," Chow noted.

China accounts for approximately one-third of Fonterra's total exports. In May, the company posted its third quarter results for fiscal year 2023, showing pre-tax revenue for the Greater China region reached $210 million, up 12 percent year-on-year.

With China's optimized epidemic prevention and control measures boosting social mobility and international exchanges, the domestic market is now emerging from the pandemic with strong signs of recovery, Chow said.

Among these trends, Chow said "dairy consumption has grown significantly in China and is expected to continue to do so - in fact, China is expected to remain the world's largest importer of dairy products."

Growth in China's dairy industry slowed down in 2022 to below average in the food manufacturing industry.

But production in the Chinese dairy industry and the vitality of the dairy products market is gradually recovering, industry insiders said at an industry seminar in June.

Chow said there is a strong alignment between Fonterra's priorities and the Chinese government's priorities in terms of nutritional targets for dairy consumption and China's sustainability targets. 

Besides an uptick in demand, Chow said the company also benefits from an upgraded China-New Zealand Free Trade Agreement and the implementation of the Regional Comprehensive Economic Partnership at a time of rising trade protectionism and uncertainty.

The combination has delivered more favorable export conditions, Chow noted. 

Chinese experts said the economic and trade cooperation between China and New Zealand is complementary and has served as a ballast stone for bilateral relations, while companies in both countries benefit.

China has been New Zealand's largest trading partner for years, accounting for around 30 percent of New Zealand's exports of goods and services.