According
to Dairy Products China
News issued by CCM in June, On 4 June, the Ministry
of Industry and Information Technology (MIIT) released an Action Plan
for Improving the Quality Level of Formula Powder and Enhancing Consumer
Confidence (the Plan), aiming to strengthen the competitiveness of domestic infant
formula.
The
Plan emphasizes several aspects as follows:
•
Strengthening internal management procedures: MIIT will
organize special inspections to assess the quality and safety of infant formula
processors during June- August, aimed at driving them to improve and implement
their internal quality and safety management systems, and take measures to
improve consumer confidence. For example, they should publicize basic
information about their business and make available a contact number for their
chief executives on the National Food Industry Enterprise Credit Information
Public Service Platform (a website which was launched in September 2011 by the
China government to foster greater “integrity” amongst food enterprises). They
should also make a public commitment in advertising media that they are working
to ensure product quality and safety
•
Strengthening management of industry development: the Plan aims
to regularize the numerous investments in new plants or in plant
refitting/expansion by reviewing these during the year and eliminating projects
which are judged to be non-beneficial
•
Boosting the industry’s restructure by encouraging M&A to
achieve a more concentrated industry which can allocate more funds to R&D,
whilst closing down backward production facilities
•
Promoting technical renovations of infant formula enterprises to put in place
better processes for quality control, safety and health, monitoring and testing
of products, and establishing traceability systems
•
Improving industrial standards: the government will speed up the formulation or
revision of product standards, management and inspection standards, as well as
increasing the transparency of the standard formulation process (an aspect
which has encouraged no little controversy in the past)
•
Strengthening the industry’s public image: in order to increase consumer
confidence, infant formula enterprises should organize consumer visits to their
plants. The industry association should work to raise awareness of food safety
laws and regulations and relevant scientific knowledge, and strengthen the
education and training of processors’ staff in terms of professional ethics and
know-how
It
is estimated that about half of the infant formula brands (both domestic and
imported) will be eliminated from the Chinese market, if the Plan is
implemented strictly. At present, most Chinese infant formula producers are
small-scale. It is reported that overall local sales of infant formula stand at
USD9.6 billion/RMB60 billion (USD6.2 billion/RMB38.5 billion in 2012 according
to AC Nielsen), and that about USD1.6 billion (RMB10 billion) comprises product
from small-scale producers, mostly operating as OEMs. If the Plan succeeds in
requiring true traceability systems these products will not survive, opening up
the USD1.6 billion (RMB10 billion) segment to national and some 2nd and 3rd
tier brands.
However,
such a dramatic level of industry restructuring seems ambitious to say the
least − what the government wants and what the market provides may prove hard to
align. Certainly the Plan represents the continuation of the State Council’s
decision making. On 31 May, Chinese Prime Minister Li Keqiang held an executive
meeting of the State Council and emphasized that the government will further
strengthen the quality and safety supervision of infant formula. This followed
the release by the China Dairy Industry Association in April of a report which
announced that the quality of domestic infant formula is much higher than that
of imported infant formula, while the latter is twice as expensive.
Unsurprisingly this prompted a good deal of consumer questioning, as it flew in
the face of their perceptions. Whether realistic or not, the Plan does at least
set out to address such matters in a more credible fashion.
Xinjiang
Dairy Expansion Faces Challenges
Dairy
Industry Overview, January-April
Further
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Dairy Products China News, a
monthly publication issued by CCM on 30th or 31st, offers
you the latest information on new market dynamics, company development, new
products, technology, packaging and raw material supply, etc. It also focuses
on the government’s direction and polices, helping you get the whole picture of
the industry.
CCM is dedicated to market research in China
Guangzhou
CCM Information Science & Technology Co., Ltd.
17th Floor, Huihua Commercial & Trade Mansion, No.80 Xianlie Zhong Road, Guangzhou 510070, China
17th Floor, Huihua Commercial & Trade Mansion, No.80 Xianlie Zhong Road, Guangzhou 510070, China
Tel: 86-20-37616606
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