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S. Korean powdered milk producers eye growing Chinese market

All Headlines 11:12 March 09, 2016

SEOUL, March 9 (Yonhap) -- South Korean powdered milk producers are in the midst of expanding their foothold in China, seeking to cash in on the growing popularity of imported dairy products among the increasingly health-conscious Chinese consumers, industry officials said Wednesday.

The Korean milk companies also view the vast Chinese market as a new frontier to resolve their worsening inventory problems, they said.

Chinese purchases of foreign milk powder have grown rapidly since domestically produced milk tainted with an industrial chemical killed six children and sickened about 300,000 in 2008.

China imported US$2.47 billion worth of infant milk formula in 2015, up 59.6 percent from a year ago, according to the data compiled by the Korea International Trade Association (KITA).

While Western products enjoy massive popularity, South Korea took ninth place with a 3.5 percent market share, or $939.7 million in sales in 2015.

The fast-growing Chinese market opens up opportunities for Korean milk producers as they have been grappling with increasing milk inventories due to an oversupply and sluggish consumption amid a falling birthrate.

To attract safety-conscious parents, major Korean companies are stressing food safety and formula optimized for Asian babies, and have joined hands with local partners for nationwide distribution.

Maeil Dairies Industry Co., South Korea's largest dairy firm, launched an Asian infant formula research center in China in November and plans to form a joint venture with China's Beingmate Baby & Child Food Co. to develop lactose-free dried milk.

Maeil has partnered with major Chinese online marketplaces to sell their products in the mainland, while selling products at local duty-free shops.

As a result, its sales of powdered milk in China jumped from $6.3 million in 2011 to $470 million in 2015.

No. 2 player Namyang Dairy Product Co., which entered the Chinese market in 2008, has stepped up efforts to expand its sales channel through online marketing and a partnership with local distributors.

In October, the company launched a dried milk brand targeting the Chinese, selling it through Jingdong's direct online sales site.

Namyang said it posted $350 million in sales last year in China and aims to grow 10-20 percent this year.

ejkim@yna.co.kr
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