According to a recent
online survey, 9 years after the melamine scandal, 50% of interviewees see
improvement in the quality of Chinese milk and even 75% are confident in the future
production. However, milk imports are still playing a huge role for Chinese
demand, led by New Zealand and Australian producers.
In
2008, China has seen a huge quality scandal in dairy products, as chemical
melamine was found in several dairy products. Since then, the government has
implemented dozens of stricter rules and the quality of milk has improved
significantly.
As
a summary, the milk industry has been in the shadow of a safety scandal since
2008, when infant formula produced by Sanlu Group, then a leading dairy company
in northern China's Hebei province, was found to contain the chemical melamine,
which killed six babies and left thousands seriously ill.
Milk
is a daily consumable product, which requires sufficient quality standards to be
accepted and bought by China’s growing middle class. Due to bad experiences in
the past, Chinese consumers are still hesitating in buying milk produced in
China and many keep to the purchase of foreign imported milk.
However,
9 years after the big scandal and many reforms later, a recent online survey
carried out by the Social Survey Centre of the China Youth Daily revealed, that
more than 50% of the interviewees have confirmed that the milk quality of
Chinese producers has improved in recent years. The share of those questioned
who have a high confidence in domestic produced milk for the future is even
higher with more than 75%.
It
might be worth noticing, that the largest group of interviewees was between 37
and 47 years old, well remembering the melamine scandal and the low quality of
China’s dairy products that they used to have.
However,
when choosing between domestic and foreign milk, China’s consumers are still
very split up. According to the survey, the preference for domestic milk is
1.4% points higher than for imported milk, giving the two options a
neck-and-neck race.
The
biggest complaints about domestic milk quality are targeting the nutritional
value of milk and safety concerns for consuming. These doubts are still
existing, even the dairy industry in China is ensuring that high quality and
international standard procedures are followed.
The
Dairy Association of China has said that 99.5 percent of dairy products checked
in 2016 were up to standard and no illegal additives, such as melamine, had
been detected in fresh milk for seven years.
Although
overall confidence in domestic milk has grown to some extent, some customers
are still concerned about the negative influence of air, water and soil
pollution on domestic milk quality, so they keep buying imported infant
formula.
Australia and New
Zealand benefit most from demand
Australia
and New Zealand are among the largest exporters of milk and other dairy
products to China. Together with Germany, they are forming the top three import
origins. Benefitting from highly accepted high-quality products by Chinese
consumers and the geographical closer distance to China than Western milk
producers, enterprises from these countries are making huge profits in the
Chinese market.
One
example for this is New Zealand’s A2 milk company, which is constantly
investing in its marketing and product quality development to gain more market
share in China. The enterprise sells fresh milk products through major
cross-border e-commerce channels and 4,000 retail stores in China.
According
to the company’s financial statement, China and other Asian markets contributed
133 percent growth in segment revenue and a 258 percent surge in operating
EBITDA in the 2017 financial year.
Among
them, China will continue to see increased production as a result of long-term
investments in dairy cattle genetics and from the consolidation and
modernisation of dairy facilities. However, the increased output bodes ill for
China’s dairy import needs, because an improved domestic production is very
likely to constrain imports, ending a multi-year trend of import growth in
China.
About CCM
CCM
is the leading market intelligence provider for China’s agriculture, chemicals,
food & ingredients and life science markets.
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