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Mengniu embraces Belt and Road strategy to expand into new markets

By RJ Whitehead

- Last updated on GMT

Mengniu embraces Belt and Road strategy to expand into new markets
One of China’s biggest dairy producers has revealed plans to launch localised products in overseas markets later this year to take advantage of Beijing’s much-vaunted Belt and Road initiative.

China Mengniu Dairy cited the opportunities that have stemmed from China’s growing trade with regions participating in the infrastructure policy, which has set out to build a trade network that connects Asia with Europe and Africa.

Southeast Asia features prominently in Inner Mongolia-based Mengniu’s plans, not least after it formed partnerships with suppliers in Indonesia earlier this year. 

The company is currently building three digitally enabled plants in China to serve as manufacturing bases for exports to Asian countries. One of these, in Zhejiang province, aims to ship more dairy products to Southeast Asia.

It has also recently entered markets including Hong Kong, Macao, Mongolia, Singapore and Myanmar, though it will also continue to invest in dairy production bases in Australia and New Zealand, as well as in Europe and North America, according to its chief executive, Jeffrey Lu.

A co-operation agreement signed last year with the autonomous region of Tibet to build a modern pasture and a dairy factory will serve local consumers and also cover South Asian markets including India and Nepal. 

So far, some 1,500 cows have been raised in the pasture ahead the completion of the factory, which will eventually have an annual capacity of some 50,000 tonnes of milk.

"Encouraging dairy consumption is a reflection of economic success in many markets related to the Belt and Road initiative. The types of foods people eat now include health and convenience foods​," Lu told China Daily​. 

He said he is aware of the cultural challenges of exporting to “less familiar economies​” and operating within different legal environments with differing regulations, though the company has embraced a strategy of employing indigenous staff wherever possible.

"We developed new products to meet the preferences of local consumers in Hong Kong, Macao and Indonesia. In New Zealand, 80% of our staff are locals​," Lu said. 

"After we acquired a large company in Australia in 2016, we retained 95% of their local employees,​” he added. 

More from China…

Agrana invests €22m in east China R&D and manufacturing plant

Agrana, the European fruit ingredients major, will make its biggest single investment in China with the construction of a new plant in the east of the country.

Agrana

Located in in Changzhou, the manufacturing facility will cost EUR21.75m (US$25.3m) and focus on research, development and production of jam ingredients, fruit juice concentrates, fruit and vegetable products and seasonings.

Construction is expected to be completed by the end of 2018, and the facility should become operational by 2019. It will serve customers including Danone, Mengniu, Bright Dairy, and Unilever, the company said. 

Agrana is the first European food processing firm to establish a footprint in Changzhou National Hi-Tech District, near Shanghai, which has so far attracted investors from 1,580 companies from 68 countries.

Austria-based Agrana already has 56 fruit, sugar and dairy manufacturing sites across the world. Its global fruit processing operation accounts for 44% of its total revenue.

Related topics: Manufacturers, Emerging Markets, Fresh Milk

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