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Chinese dairy Yashili announces New Zealand processing investment

By Mark Astley , 14-Jan-2013

Chinese dairy processor Yashili has announced plans to establish infant formula manufacturing operations in New Zealand – becoming the latest in a growing line of Chinese dairy processors to make the move south.

Guangdong-based Yashili announced in a Stock Exchange of Hong Kong filing late last week that it intends to invest around RMB 1.1bn ($177m) to establish a processing facility in New Zealand with an annual capacity of more than 50,000 tonnes.

Before construction can start however, Yashili’s investment proposal must be approved by the Overseas Investment Office in New Zealand (OIONZ).

If approved by the OIONZ, Yashili’s facility is scheduled to be operational in the second half of 2014.

52,000 tonnes capacity

“The board of directors of the Company is pleased to announce that the Board has approved the project plan for establishing a manufacturing facility for production of finished products and semi-finished products, including base milk powder in New Zealand,” said Yashili’s Stock Exchange of Hong Kong announcement.

“The annual production capacity of the plant is expected to about 52,000 tonnes.”

“The total investment involved in the establishment of the New Zealand facility by the Company is estimated to the RMB1.1bn, our of which RMB950m will be for acquisition of land and cost of construction, and RMB150m will be utilised as working capital of Yashili New Zealand Dairy Co., Limited, a wholly-owned subsidiary of the Company which will establish and operate the New Zealand facility expected to be completed and put into operation in the second half of 2014,” the statement added.

The company confirmed that it has submitted an application to OIONZ in relation to the proposed investment, adding that a further announcement would be made if the plan is given government approval.

Domestic demand for foreign goods

Yashili’s investment announcement comes just one month after Chinese dairy giant Inner Mongolia Yili Industrial Group (Yili) announced almost- identical plans to establish operations in New Zealand.

According to reports, Yili hopes that though its RMB 1.1bn it can help to meet increasing domestic demand for foreign-made ‘safer’ dairy products.

The Chinese dairy industry has been scarred by a series of food safety scandals in recent years.

In 2008, six children died and 300,000 people were sickened after consuming melamine-tainted infant formula. The country’s dairy industry has faced a consistent stream of dairy-related contamination incidents since.