November 4, 2013

Tingyi and Asahi form joint venture to sell milk powder in China

Tingyi Holding Corporation, China's largest instant noodle maker, and Wakodo Co., Ltd., a unit of Japan's beer maker Asahi Group Holdings Ltd., plan to enter a joint venture that sells infant milk formula and baby products in China.

Tingyi will hold a 45% stake in the joint venture, while Wakodo will own the remaining 55%. With a registered capital of US$5 million, the joint venture will mainly market and sell baby products. However, the venture will not be involved in any manufacturing, Tingyi's CFO Frank Lin said.

The deal is awaiting approval from relevant authorities, Tingyi also said in a statement.

According to data from Rabobank and Euromonitor, foreign firms control about 40% of the baby formula market in China, with Mead Johnson Nutrition Co holding the biggest share, followed by Nestle and Danone.

The lucrative Chinese dairy market is currently valued at US$12.4 billion, and expected to double by 2017. However, it is hotly competed and has been embroiled in corruption scandals this year. Japan's Meiji Holdings Co., Ltd. is pulling out due to strong competition, while foreign firms, namely Danone, were accused by the Chinese media of bribing medical staff in return for recommending their products.