April 30, 2004

 

 

China's Heilongjiang Beiya Looking To Make Big Impact In China's Dairy Industry
 
The increasingly lucrative dairy market in China has attracted plenty of newcomers to the industry in the past year. With most analysts believing that the growth potential in the China dairy market is yet to be fulfilled, competition in the industry is bound to get hotter.

 

Of the list of newcomers to the industry, Heilongjiang Beiya Dairy Co Ltd in northeast China has attracted plenty of attention. Backed by the Beiya Industrial Group Co Ltd, a company best known for railway transportation and high-tech development, substantial funds were injected into the dairy company.

 

Last January, Beiya Industrial invested more than RMB 50 million (US$6 million) in the establishment of Beiya Dairy, with the aim of becoming the largest dairy manufacturer in China. It plans to sink a further RMB 2 billion (US$241.8 million) in the future to achieve the goal of becoming one of China¡¯s top dairy producers with an annual liquid milk production of 500,000 tons.

 

"Everything about our company is new, but the latest and highest standards are applied at the same time," said Beiya Dairy Chairman and General Manager Yu Hongbo.

 

The company would build 10 dairy farms, and import 10,000 heads of the best-quality cattle in the meantime.

 

Yu added that they have plans to build the farms into a state-level raising base for the best cows, as well as an organic milk production base.

 

The company will also establish 80 mechanized milk parlours with a daily capacity of 420 tons along the National Road 301, which links Harbin, Daqing and Qiqihar cities in Heilongjiang.

 

In addition, the dairy producer has signed agreements with a number of cattle breeders for providing unprocessed milk.

 

Some neighbouring counties and villages have joined in to serve as enclosed dairy farms.

 

According to Yu, the company has completed the first phase of construction, which has enabled a daily production of 500 tons of fresh milk with an investment of RMB 690 million (US$83 million).

 

"By the end of 2007, we are expecting to increase our daily fresh milk production to 1,000 tons, becoming the largest producer in China," he said.

 

The company intends to produce five main lines of products with 29 varieties, including specific brands for baby milk.

 

"We will launch our first products in the domestic market next fall, which I believe will give a positive impact to the market and speed up the industry's development," Yu said.

 

But before its own factories could start operations for production, Beiya Dairy will make OEM (original equipment manufacturer) products first.

 

According to Yu, brands are important for a company's development. That was the reason why they chose this method to forge their brand first.

 

"Beiya is competitive in its highly qualified milk source and advanced technologies, as compared with our domestic rivals."

 

Since its establishment, the company has recruited a wealth of highly skilled personnel and senior managers.

 

Moreover, it has established a sound co-operative relationship with local science and research institutes such as the Heilongjiang Micro-organism Research Institute. These institutes are used as the company's own research and development bases.

 

The company has also employed Guo Mingruo, a famous scientist who is now a professor at the University of Vermont in the United States. He would serve as a leading expert of its panel to develop the newest types of milk products.

 

Marketing is greatly emphasized in Beiya Dairy's development plan.

 

It will focus on the market in Northeast China. And more effort would be placed in several areas with high consumption capability such as Beijing, Tianjin, the Yangtze River Delta and the Pearl River Delta.

 

The coastal regions are also target markets.

 

At the same time, the company plans to tap a number of markets outside of the Chinese mainland, including Russia, Hong Kong, Macao and some Southeast Asian countries.

 

Presently it has clinched partnerships with retail agents in 17 cities in China, and it will launch a series of nationwide promotion activities soon.

 

According to Yu, Beiya Dairy can earn an annual income of 3 billion yuan (US$363 million) with profits reaching RMB 375 million (US$45 million) after all its projects are completed in 2007.

 

With the completion of its first phase of construction, it is expected to earn an annual income of RMB 1 billion (US$121 million), earning profits of RMB 120 million (US$15 million).

 

Consequently, relevant local farmers can see a total increase of RMB 300 million (US$36 million) to their net income.

 

About 50,000 rural households around Daqing City will benefit from the first phase of production, Yu said.