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Chinese Giant Dairy Corp Aiming US$3b Sales Target
China's pillar dairy-product enterprise Yili Corp is looking to elbow itself into the world's top-20 dairy multinationals by investing hundreds of millions of dollars in production expansion over the next decade or two.

The ambitious strategy will help it reach annual sales of about US$3 billion by 2010, said Zheng Junhuai, chairman of Yili.

The sales target is 10 times last year's but "is still small compared to China's huge market potential," Zheng said.

China, with a population of more than 1.3 billion, last year produced only 11 million tons of milk, far behind India at 80 million tons.

But "if every Chinese had a cup of milk a day, the country would consume all the world's milk," Zheng said.

Zheng predicts that China can match India's milk output in 10 years.

Eyeing the huge market, many foreign dairy-product companies came to China, vying with each other as well as their Chinese counterparts.

But the result was not as they expected. Some have retreated from China's market or have partnered with Chinese firms to manage their operations, he said.

They found the Chinese market different from Europe's or America's.

The country is so big that consumer tastes vary greatly from region to region.

"None of the companies can control as great a market as China," Zheng said.

The country needs at least several - and perhaps more than 10 - brand name dairy products, he added.

"What we must do is enlarge our production capability to grab as much market share as possible," the Yili chairman said.

Zheng revealed the corporation's development blueprint, which aims to set up more factories nationwide using advanced technology and equipment from abroad.

Yili has formed three production bases in Inner Mongolia, Northeast China and North China by co-investing 250 million yuan (US$30 million).

A factory in Daqing, Heilongjiang Province, equipped with machines from Denmark and Germany, will be put into operation next year to process 600 tons of fresh milk into milk powder daily.

The corporation now has 180,000 cows raised by herdsmen in North China, Northeast China and Northwest China that provide 2,500 tons of milk daily for processing.

"The growth of the dairy business has helped many herdsmen escape poverty and made them restructure their farming production," Zheng said.

(China Daily August 23, 2002)

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