China's dairies facing fierce competition

BEIJING -- China's dairy enterprises, especially infant formula makers, are bracing themselves for intense rivalry with foreign counterparts following the country's new regulation to streamline imported dairy products.

So far, over 1,000 overseas dairy producers have received entry approval from China's quality watchdog. Among those 41 are makers of infant formula milk powder from 13 countries including New Zealand, Ireland and Singapore.

According to the new rule that took effect on May 1, foreign dairy companies have to ensure their products are consistent with China's safety standards and registered to the General Administration of Quality Supervision, Inspection and Quarantine. It is the only way to gain access into the market.

The move was regarded as fresh efforts from the Chinese government to further regulate the country's dairy market for better product quality, keeping the excellent and weeding out the unqualified, especially fake foreign brands that are actually produced by local makers.

Industry analysts predict around 50 percent of small foreign milk powder producers that lack research capabilities will be ruled out of the Chinese market by the restriction.

The regulation, although seemingly harsher to overseas companies, is unlikely to hinder the operation of major international producers like Danone, Wyeth and Mead Johnson, which have all been included in the approval list.

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