July 29, 2008
China's Sichuan New Hope Agribusiness has acquired an Inner Mongolia dairy firm for a reported RMB 100 million (US$14.6 million).
The purchase of a 51 percent stake in Inner Mongolia Feichangniu Dairy Co will help New Hope to expand into northern China, according to Li Jiahong, spokesman for the company's parent firm, New Hope Group.
Li said China's dairy industry is undergoing a new wave of consolidation and a company has to be big or it will be eliminated from the market.
Last month, China implemented new rules to restrict investment in the domestic dairy sector so as to weed out smaller players and encourage consolidation.
New Hope, which also owns feed and meat processing businesses, had dairy sales of RMB 1.1 billion (US$161 million) last year, with sales volume at 230,500 tonnes.
Li said the company is still very small in the dairy industry but will expand rapidly once they have established footholds nationwide.
Li added that New Hope had so far made 12 acquisitions in the dairy industry.