China milk makers to get $6 billion in state support

China milk makers to get $6 billion in state support

BEIJING - Chinese milk-powder makers, including Inner Mongolia Yili Industrial Group and China Mengniu Dairy, are set to get 30 billion yuan (S$6 billion) in official funds to support sector consolidation, the media said.

As well as Yili and Mengniu, the first group of firms to benefit would include Feihe International, Heilongjiang Wondersun Dairy and Treasure of Plateau, the official China Business Journal said in its Saturday edition, citing an unidentified source.

The authorities have said that they want to consolidate the domestic milk-powder sector to increase the ability of companies to compete with international rivals who dominate the lucrative premium end of China's US$12.4-billion (S$15.5-billion) infant-formula market.

Chinese milk-powder firms would receive the support in the form of government subsidies, funds from China Development Bank and favourable tax policies, the China Business Journal said.

Milk powder is a sensitive topic in China, after a 2008 scandal, involving milk and infant formula that was tainted with the industrial chemical melamine, led to the deaths of at least six infants and made thousands ill.

China's Ministry of Industry and Information Technology had previously released a plan to slash the number of domestic infant-formula firms in the highly fragmented market over the next five years to 50 from about 200 now, as it looks to create stronger sector leaders.

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