Foreign Companies Look to Expand Presence in China’s Dairy Industry

Switzerland-based Nestlé S.A. has announced plans to fund a dairy farming institute in Shuangcheng, China, to help the region’s suppliers expand their businesses and source “high quality milk sustainably.” According to a January 11, 2012, press release, the new institute “aims to be the country’s leading dairy training center, offering teaching courses from national and international experts.” The company and city of Shuangcheng are reportedly investing 2.5 billion Chinese yuan in the project, which will also guarantee bank loans for purchasing additional cattle and increase the “training and technical assistance already provided to local farmers.”

As further noted in a January 13, 2012, Wall Street Journal article, Nestlé
evidently “hopes to increase its market share in China’s dairy industry”
and believes larger farms will help “boost production and efficiency while
projecting a reputation for safety.” Other foreign companies such as Fonterra
Co-Operative Group Ltd. have likewise indicated interest in more consolidated
farming operations, which would streamline a supply chain plagued
by several food safety scandals, including melamine-tainted milk powder.
“This new training institute is a continuation of our long-term investment in
the future of Shuangcheng to ensure it remains one of China’s leading dairy
districts,” said Nestlé China Chair and CEO Roland Decorvet.