Entering text into the input field will update the search result below

Survey Shows That 70% of Respondents Won't Choose China-made Milk Powder

Apr. 11, 2011 9:31 PM ET
Eileen Gu profile picture
Eileen Gu's Blog
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.
www.cri-report.com - Customers in Mainland China purchased infant milk powder in bulk in Hong Kong at the end of 2010 and the beginning of 2011, resulting in tight supply of milk powder in Hong Kong once. A variety of infant milk powder even experienced supply shortage for over a week. Afterwards, the same situation occurred in Macao, resulting in the shortage of milk powder in Macao.

Afterwards, media reported that some domestic illegal enterprises mixed a substance called "leather hydrolyzed protein powder" into milk in order to increase protein content in milk. It is reported that the so-called "leather hydrolyzed protein powder" is the powder generated after the hydrolysis of leather scraps and even animal hair, which is of high protein content and can increase protein content in dairy products. The incident causes turbulence in Chinese dairy industry once again after the "Melamine Incident".

70% of Respondents Never Choose China-made Milk Powder
Currently, customers obviously lack confidence in China-made milk powder. The reporter has carried out investigations on supermarkets and exclusive stores selling mother and baby products with concentrated infant milk powder sales, and conducted interviews with infant milk powder purchasers. Results show that nearly 70% of respondents express no plans to purchase China-made milk powders. Due to customers' lack of confidence in China-made milk powder, sales volume of imported milk powder is obviously larger than that of China-made milk powder in most supermarkets and exclusive stores.

Supply of Imported Milk Powder Accounted for Nearly 50% in 2010
National statistics show that output of China-made infant milk powder experienced an obvious decline in 2010. According to the statistics of the China Dairy Industry Association, output of infant formula milk powder was on the decrease by about 12% in 2010, while it always increased in the past years. In 2010, Chinese supply of infant milk powder reached 560,000 tons, among which foreign brands accounted for approximately 50% with an obvious increase.www.cri-report.com/251-research-report-o...

The decline in output and market share of China-made infant formula milk powder reflects Chinese customers' mistrust in quality safety of China-made milk powder from one side. And the major reason for customers' confidence decline is the successive occurrence of quality safety incidents of China-made milk power in recent years.

Fuyang Milk Powder Incident in 2004, Sanlu Milk Powder Incident in 2008 and Leather Milk Incident in 2011 all lead to a great crisis of quality safety in Chinese domestic dairy industry and substantial decline in confidence of customers in China-made dairy products.

At Least 1/3 of Dairy Enterprises Will Be Eliminated
According to the statistics, China has over 800 large-scale dairy enterprises and 139 infant formula milk powder producing companies in total. And the output of the ten mainstream brands occupies over a half of total national output. By Feb. 23, 2011, over 70 infant dairy product enterprises have been approved for new production licenses. Meanwhile, a group of unqualified enterprises will be forced to withdraw from the infant dairy product market.

In this context, at least 1/3 of enterprises are inevitably eliminated. Supervision departments will adopt stricter management and approval measures for the dairy market. From Mar. 1, 2011, the State Administration for Industry and Commerce will list dairy products in food circulation licensing projects for separate audit, strictly register the business scopes of business licenses according to licensing projects, and punish those enterprises conducting illegal dairy product operation without food circulation licenses according to law. Infant formula milk powder, wholesale enterprises and large and medium-sized supermarkets are taken as the key supervision targets, random inspections on which should be implemented weekly by persons in charge of supervision, and regular inspections should be conducted on small supermarkets, retailers and grocery stores. The State Administration for Industry and Commerce enhances supervision to withdraw unqualified products samples and dairy products with problems from the market, and takes stringent measures to prevent unqualified dairy products from entering the market once again.

To get more details, please go to www.cri-report.com/251-research-report-o...

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.