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CONCERNS ABOUT food safety in parts of the China market underlie a plan by the Chinese infant formula maker Yashili to build a $220m plant at Pokeno, just south of Auckland.
The company explained this to an independent commissioner, Michael Savage, appointed by the Waikato District Council, which late August granted consent for the plant. The consent is subject to a 15-day appeal period which finishes early this week.
Yashili NZ Dairy Co is a wholly owned subsidiary of a Hong Kong listed company Yashili International. China Mengnui Dairy, of which the Chinese Government is the biggest shareholder, currently has a deal to buy a majority stake in Yashili International – worth about $2billion – as part of a plan to expand its milk powder business.
Yashili is ranked about eighth in the China milk formula market and China Daily says the acquisition would be the largest single deal in the Chinese domestic dairy industry. It is expected to lead to further integration in China’s milk powder business, the newspaper reports.
General manager of Yashili NZ, Yingxiang Zhao, told the hearing for the Pokeno infant formula plant that Yashili International is based in the Guangdong Province in China and it has plants there, and in two other locations in China. Established in 1983, Yashili has since 1998 focused on making infant milk formula and nutritional foods products. Its infant formula brands are Scient and Yashili. It has a research and product development centre in China employing 32 scientists.
Yashili International is experiencing strong consumer demand for safe nutritional products for infants and young children, Zhao told the commissioner.
This demand, and concerns about food safety in some parts of the China market, has lead the company to decide to establish a manufacturing operation in a suitable offshore location, Savage says in his report.
Yashili already sources milk powder from New Zealand and first imported New Zealand products to China 10 years ago. The premium end of Yashili’s product line has been based on New Zealand ingredients since 2010.
The Pokeno plant will employ 120 people and the company is in discussion with potential partners and suppliers to source about 60 million litres of local milk each year and about 6000 MT of whey protein concentrate from New Zealand suppliers. Zhao told the hearings that Yashili was committed to being a good corporate citizen in New Zealand. Its brand reputation is a valuable asset which is does not want tarnished.
About five staff will be brought from China who will be specialists in product formulation and import/export regulations. The rest are expected to be locals, including 75 staff on shifts 24/7.
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