A notice flapping on the entrance of an infant formula store in northern Beijing reads “discount sale and store for rent.” The retailer is trying to empty its shelves, which are mostly stacked with foreign baby formula cans — especially brands that aren’t registered with China’s Food and Drug Administration (CFDA) — before new safety laws kick in on Jan. 1…Full Article: Caixin Oct 2017

Key Points

  • As of October 2017, according to the deputy head of the CFDA’s product registration department, approximately 400 (out of 1,000 to be allotted) infant formula product applications have been approved. An official from China’s Certification and Accreditation Administration estimates that foreign brands will account for approximately 300 of the 1,000 approved infant formula products. It is estimated that roughly 2,000 infant formula products are currently sold in China.
  • In 2016, according to Expo315, market sales from 10 leading Chinese infant formula brands totaled CNY 25 billion (USD 3.79 billion), while sales from the top 5 leading foreign brands totaled ~CNY 35 billion [~USD 5.3 billion].

ChinaAg Comments

  • In January 2017, Chinese dairy producers reported declining profit margins due to e-commerce imports of foreign brands, high costs, price competition, and inventory issues.
  • As of early December 2016, the CNCA had not lifted the import restriction on Australia’s Viplus Dairy. For a complete list of approved international suppliers of infant formula to China, please visit: http://www.cnca.gov.cn/bsdt/ywzl/jkspjwscpqzc/
  • On 4 November 2016, the CNCA pulled Viplus Dairy’s import license.
  • In June 2016, 3.8 MTs of infant formula from Australia’s Viplus Dairy was prevented from entering China due to incorrect labeling.
  • In April 2016, China’s Ministry of Finance clarified that all infant formula imports, including e-commerce shipments, must be registered with the CFDA by January 1, 2018.
  • From 2011 to 2015, according to China’s AQSIQ, Chinese imports of infant formula increased from 57,000 MTs to 176,000 MTs.
  • In June 2014, China’s Certification and Accreditation Administration (CNCA) instituted new regulations that decreased the number of permissible foreign infant brands sold in China to 94. The majority of CNCA-approved foreign infant formula suppliers were based in New Zealand, Australia, USA, and Europe, with Singapore and South Korea being the only Asian approved suppliers.
  • From 2008 to 2014, Chinese (incl. Hong Kong and Macau) imports of milk powder increased from ~181,500 MTs to more than 1 million MTs, with New Zealand accounting for nearly 70% of this supply. The majority of these imports were comprised of whole powdered milk (fat content >1.5%), a key ingredient used in China to produce infant formula, milk beverages, reconstituted milk and yogurt, as well as confectionary products.

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