"Chinatown"-Official media of Chinese Australians

The signing of the China-Australia Free Trade Agreement is expected to greatly stimulate the export of Australian-origin infant formula milk powder to China. While local Australian companies are accelerating their efforts for export certification, they are innovating business models for the Chinese market and striving to establish supply and marketing channels. Be one step ahead and even better.

ACB News "Australia Finance Online" reported that in May last year, the Chinese government started to clean up the foreign milk powder market and imposed stricter certification requirements on overseas suppliers. The growth rate of Australia's milk powder exports to China slowed down. However, after experiencing short-term setbacks and confusion, Australian export companies have stabilized their positions.

According to industry data, since the start of the melamine tainted milk powder incident in 2008, Chinese consumers' safety awareness of baby food has suddenly increased, stimulating domestic milk powder imports to increase at a high rate of 25% per year to the current 1.2 million cans. Australia only occupies a small share of it, with an export volume of about 500 million cans (900 grams, 4500 tons). But judging from recent progress, this situation is expected to change rapidly.

On July 7, the Victorian dairy company Camperdown Dairy International, which just passed the last pass of China’s imported milk powder certification last week, confirmed to the outside world that it has reached a 27-year large-scale transaction with an annual export value of 15 million Australian dollars, covering 6 The supply of 1000 cans of milk powder is equivalent to twice the annual export volume of Australia’s current milk powder.

Mr. Damien Weis, the director of Great Wall Capital Trading, which is the facilitator of the transaction and specializes in the export of infant milk powder, believes that the Chinese people's concerns about food safety have brought "great opportunities" to Australian farmers and food manufacturing companies. China's rapidly growing middle class is more concerned about the origin of food and is willing to pay a high premium for imported products.

"In China, there are 7000 million infants and children under the age of three. Their parents and grandparents are buying milk powder for their children and want to buy safe products." According to the Australian newspaper, "This is why they choose to have The reason for the clean and safe reputation of Australian products".

In keeping with the concerns of Chinese consumers for product safety, Camperdown infant formula cans will be marked with a scan code, and buyers can scan through their smartphones to easily obtain information about the entire supply chain of milk powder from farm to shelf. Based on the control of the entire production process, Mr. Weis is very confident about the sales prospects of Camperdown milk powder in China. "Unlike other companies that purchase milk from third-party farms, Camperdown follows an integrated operation model, from farm purchase to processing. The whole process of setting up factories and distribution centers is done by yourself." Any can of milk powder can be traced all the way to a specific dairy cow.

In order to achieve ambitious export goals, Camperdown, founded by Queensland tycoon and mining service entrepreneur Bill McDonald, is expanding in full force. The private company established two years ago currently owns 3000 hectares of real estate on the border of Victoria and South Australia, and plans to buy more land to develop dairy farms and invest 1.2 million to increase processing capacity. The resulting vertically integrated supply chain can produce 10 tons of milk powder annually, and one-tenth of the output is sold to China.

The China-Australia FTA is expected to cut tariffs on milk powder by as much as 20%. Under the stimulus of the lucrative profit prospects, the willingness and confidence of Australian companies to open up the market has greatly increased, and the racing model has already been launched. In addition to Camperdown, a number of companies have obtained certification for export of milk powder to China, including Australia's largest dairy exporter Mai Gao and Australian Dairy Park supported by China.

ACB News continues to report that in November last year, Australian mining tycoon Reinhardt and a Chinese state-owned company jointly created a 11 million Australian dollars joint venture entity to export infant milk powder from Queensland to the Chinese market (related link). New Zealand Fonterra plans to set up a joint venture with China's Beinmate in the near future to establish "the first truly end-to-end global supply chain". The goal is also to send Australian-made safe, high-quality nutritional milk powder to the Chinese market where demand is huge .

Giants are running, and specialty milk powder companies are not far behind. Functional milk manufacturer A2 Milk is selling products through JD.com, and Bellamy's Australia, a manufacturer of baby nutrition foods, has launched a Chinese version of its website.

Compared with the above-mentioned case, which is dominated by the manufacturer and invested heavily in the source of supply, the investment company billionaire Smorgon family has made great efforts in marketing through the Internet (related links). In the past year and a half, NutraCare, which was quietly founded by Victor Smorgon Group (VSG), is selling milk powder produced by Gippsland processor Burra Foods to the Chinese market through online channels. Its selling point is not only traceable products, but also very Emphasize pricing advantages.

After spending a year to obtain import permits, VSG's goal is to promote a direct-order direct sales model in China, with an initial target of 2 customers. At present, it is selling products to 7 central cities in China through its sales hub in Shanghai, and the products can be delivered to households every other day.

"We believe that to enter the Chinese market, you have to be special." A person in charge of NutraCare said, "VSG's products are the most price-competitive products in the Chinese market. With the established end-to-end chain, we are entering the Chinese market in a very disruptive way."

The milk powder export storm brewed by Australian companies is sweeping. With their efforts, high-quality and safe Australian milk powder will be presented to Chinese consumers at a faster speed and lower prices. With the final implementation of the China-Australia FTA, both exporters and consumers have reasons to expect greater win-win results.

Article reprinted from ACB News "Australia Finance Online"

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