November 28, 2003



Market Share for Chinese Produced Dairy Products Likely to Shrink Further


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Since 1995, foreign dairy industry giants such as Nestle, Danone, etc. have been making inroads into the Chinese market. By the end of 2001, the world's top twenty brands of dairy products have all been firmly entrenched in China.


Industry experts forecast that after 2006, 99% of local dairy enterprises in China are likely to face a crisis of survival; fewer than ten are expected would survive.

According to information released at the ninth annual conference of China Dairy Industry Association, China imported 180,300 tons of dairy products for the first half of this year, showing an increase of 39.09% compared to the same period last year. The total imported volume valued at US$202 million, registering an increase of 50.04% over the same period last year. Specifically, the imports of milk powder rose by 77.6% to 87,000 tons, while the imports of whey grew by 11.3% to 81,800 tons.


Mr Chen Zhijie, the Deputy Director of the Animal Husbandry and Aquaculture Bureau of Changsha city, believed that with consumers' ever growing demand for dairy products, coupled with the earlier local media reports of high levels of residual drugs found in certain local brands of dairy products, imports of dairy products for the latter half of the year are likely to rise further.

Industry observers believe that the substantial surge in the imports of dairy products will have a significant impact on China's dairy industry, possibly resulting in a further shrinking of the already limited market share of locally-produced dairy products, especially locally-produced milk powder.
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