Chinese dairy Yashili invests 1.1 bln building factory in New Zealand

Source: Morning Whistle by Kang Xiaoxiao

Chinese food and dairy giant Yashili International (01230.HK) announced it is investing 1.1 billion yuan building a factory in New Zealand to manufacture powdered baby formula and other related products that come from the same industrial process.

Yashili International has submitted the application for a business assets investment license at the New Zealand Overseas Investment Office. The new factory will work as a production base for Yashili Dairy (New Zealand), a wholly owned subsidiary of Yashili International.

The company plans to spend 950 million of the 1.1 billion yuan on infrastructure construction, production equipment and other facility hardware; the remaining 150 million will be used as operating capital of Yashili Dairy (New Zealand), Zhao Yingxiang, general manager of Yashili Dairy (New Zealand) disclosed on Jan. 12.

Moreover, the new factory in New Zealand is planning to go into operation in the second half of 2014 with an annual production capacity of 52,000 tons. Yashili started its powdered baby formula business at the end of June 2010 with 100 percent imported raw milk and since August 2010, New Zealand has become the only raw milk importing country for Yashili. With Chinese consumers’ low confidence in domestic milk powders, a lot of Chinese dairy companies choose to seek high-quality milk supplies overseas.

Moreover, it was reported by National Business Daily that the tariff imposed on baby formula milk powders and yogurts exported from New Zealand to China have decreased to zero in 2012, which has greatly benefited Yashili.