The Ministry of Industry and Information Technology (MIIT) of China has prepared a draft and submitted it to the country’s top officials to consolidate domestic infant formula manufacturers as part of its efforts to boost consumption of local products.
This development is in line with the plan to encourage mergers and acquisition of domestic infant formula firms.
With this proposal, China plans to slash the number of manufacturers from the current 200 to 50 in the next five years and promote the growth of dairy companies.
The Chinese government expects the ten leading domestic manufacturers to account for about 80% of the infant formula market, with three to five firms targeting annual revenues of CNY5bn ($818m), reported Reuters citing the China Securities Journal.
Feihe International and Wondersun Dairy are likely to gain from the consolidation plan, the state-run newspaper said.
This development follows the recent series of food contamination incidents in China - last week, imports from New Zealand's Westland Milk Products were halted as the products were found to contain high levels of nitrates.
Earlier this month, China imposed ban on imports of whey protein and infant formula from Fonterra after the company said that certain batches of its whey protein contained bacteria that poses risk of botulism.
