Chinese Dairy Giant Mengniu Seeks Global Partners, Boss Says
Chen Juan
/SOURCE : yicai
Chinese Dairy Giant Mengniu Seeks Global Partners, Boss Says

(Yicai Global) Nov. 7 -- Mengniu Dairy is in the market for more international partners, according to the man at the helm.

China's largest dairy producer signed a cooperation deal with Adisseo France yesterday. Under the agreement, inked at the second China International Import Expo in Shanghai, the two will work together on cow-breeding technologies, product development and marketing and hold experience and tech exchanges, Hohhot-based Mengniu said in a press release.

"The expo has boosted the confidence of all industries, including Mengniu Dairy, to promote internationalization strategies and seek global cooperation," President Lu Minfang said in a media interview.

China is one of the world's fastest-growing dairy products markets, and is predicted to be the largest by 2022.

"China's national economy continues to develop well amid consumption upgrades, and its dairy industry has ushered in a period of strategic opportunity," Lu said. "Mengniu Dairy will rely on a global mindset and global resources to make China's dairy industry bigger and stronger, and constantly meet the needs of Chinese consumers."

China's dairy sector has fully integrated with the global market in terms of industrial chain and supply system, Lu said. From the industrial chain perspective, the country has taken a large share of the global trading volume.

"China is a huge market where middle-class consumption will change the global dairy industry's positioning in the resource supply chain," he said.

Bellamy's Australia

Mengniu Dairy announced a bid to acquire Australian infant formula and food maker Bellamy's Australia for AUD1.46 billion (USD1.01 billion) in September. Bellamy's is attending the CIIE for the first time with a series of products.

Bellamy's did not fully realize its potential before because it did not understand Chinese consumers and lacked market acumen, Lu said. "So Mengniu's first [task] after acquiring Bellamy's was to explore this. We can develop more markets. This brand has great potential."

While Chinese dairy companies are going global, an increasing number of overseas firms are hoping to further explore the Chinese market. China's dairy market is one of the most open in the world and that has led to fierce competition, according to Lu.

"The competition has toughened companies like Mengniu, bringing our product quality, research and development, and technology in line with international standards," he said.

Lu also had suggestions for overseas players entering China. "They must localize and understand Chinese consumers and young people," he said, adding that "just like us going global, the first thing to do is to understand local culture and consumers and hire local staff."

When setting up a plant in New Zealand, Lu revealed, "I only sent one Chinese engineer and all the others were locals." Overseas businesses that come to China "must fully believe in Chinese talent and the local market."

Shares of Mengniu [HKG:2319] rose 1.3 percent today to close at CNY30.90 (USD4.43) each. The stock has gained about 30 percent so far this year.

Follow Yicai Global on
Keywords: Mengniu Dairy , Lu Minfang