The go-ahead to Synlait Milk from China’s General Administration of Customs (GACG) means the company has received registration for its infant formula being processed at its blending and canning facility in Auckland. The approval paves the way for the Auckland facility to begin brand registration in China.
GACG also granted another registration linked to Synlait Milk’s advanced dairy-liquid processing facility in Dunsandel. The company says the certification is “important for the potential export of cream-based products to China,” adding that “Synlait is developing several options to target high-returning, fast-growing pasteurized and long-life dairy foods into China.”
China tightened regulations on infant-formula imports earlier this year in a bid to boost demand for domestic products.
Synlait Milk’s CEO Leon Clement said in a statement that the two approvals “confirm we [Synlait Milk] have the opportunity to continue the growth with customers looking to keep expanding in the China market.”
China’s dairy sector experienced a food safety scare in 2008 when milk powder and infant formula were found contaminated with melamine. Babies were hospitalized, and six infants died from kidney failure. China has since become more reliant on milk powders imported from overseas—in particular, infant formula.
Between 2008 and 2013, China’s imports of whole milk powder increased more than 6-fold to over 600,000 tonnes, with 91 percent imported from New Zealand, according to the European Research Council’s Global Rural project.
Back in 2013, Chinese Company Shanghai-Pengxin had secured a complete takeover of Synlait Farms, which had been supplying about a tenth of Synlait Milk’s needs, according to the NZ Herald. The two companies were founded in 2000 and shared some common ownership until 2010.
In April this year, the NZ Herald published an article that noted the trend of “increasing footprint by large Chinese government-backed companies in New Zealand’s prime export industry.” With regard to the dairy sector, “Chinese investors have significant stakes in Synlait Milk (Bright Dairy), Oceania Dairy (Yili), Yashili NZ (Mengniu) and the Synlait and Crafar farms ([Shanghai-]Pengxin),” it reported.
The article also noted that since the 2008 melamine scandal, China has been on an “offshore buying spree” for land and water resources around the world, as well as dairy farms and processing factories to ensure food security in the long term.
China was New Zealand’s top export market for major exports, including dairy products (NZ$4.0 billion), according to Stats NZ.
New Zealand’s neighbor Australia recently witnessed Mengniu Dairy, China’s second-biggest producer of milk products, securing a takeover of Australia-based Bellamy’s Organic milk for A$1.5 billion. They are also set to acquire Lion Dairy & Drinks, the second-largest milk processor in Australia, for $600 million. If Australia’s Foreign Investment Review Board approves the latter deal, major Australian brands, including Big M, Dairy Farmers, Pure, Berri, and Daily Juice, will be Chinese-owned.
Reuters contributed to this report