Foreign milk companies are gearing up for the China market. But they should not underestimate the potential competition by domestic companies, tells business analyst Shaun Rein to Reuters. “They can have the best of both worlds.”
China’s infant formula market is expected to grow to $25 billion by 2017, Euromonitor data shows, as more mothers join the workforce and spend less time breastfeeding. Food safety concerns have so far played in favor of global firms like Nestle SA, Danone SA, Abbott Laboratories and Mead Johnson Nutrition Co..
Local companies are now fighting back by espousing foreign safety standards – Bright Dairy and Food Ltd, for example, sources the raw materials for its Pure Canterbury brand from New Zealand, while China Mengniu Dairy Co Ltd this week struck a deal with Danone.
“I wouldn’t underestimate the power of Chinese brands to go upmarket and gain the trust of Chinese consumers, but forging these international ties is key,” said Shaun Rein, managing director of China Market Research Group.
“They can have the best of both worlds – the safety and quality of the product, but also the local know-how, marketing, sales and distribution.”
Tapping into China’s market might seem attractive, but is not also that easy. The China Weekly Hangout discussed on January 30 the danger of foreign firm failing in China. Featuring panelist Richard Brubaker of Collective Responsibility and Andrew Hupert, expert on conflict management in China. Moderation: Fons Tuinstra of the China Speakers Bureau. Including references to Apple, Mediamarkt, Foxconn and many others.