Dairy producers not to be forced out: ministry

CHINA - An official from the Ministry of Industry and Information Technology denied market speculation that the restructuring plan for the baby milk formula industry will force out 80 per cent of producers, or that companies with annual revenue of less than 2 billion yuan (S$410 million) will be closed down.

Speaking on the sideline of a news conference held by the ministry on Wednesday, Zhu Hongren, chief engineer and spokesman for the ministry said the speculations were not true.

China previously announced a plan to restructure the scandal-plagued milk powder industry, hoping to improve companies' tarnished reputation by industry consolidation. The statement said China planned to foster private baby formula producers with annual revenue of more than 2 billion yuan.

This has raised concern smaller companies will be closed or forced to merge.

"The speculation is a misunderstanding. The consolidation will mainly rely on market forces," Zhu said. "Two billion yuan is just one of several indicators."

He said the draft of the consolidation programme has been completed by his ministry along with the National Development and Reform Commission and the Finance Ministry, and will soon be submitted to the State Council. The programme will finalize the target of the consolidation from 2015 to 2018.

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