China’s huge dairy market attractive and problematic for TNCs

Dairy companies from Europe, Oceania and Argentina were lifting capacity to supply infant formula to China’s growing market. There are 82 million children under the age of 5 in China and only 28% of babies under 6 months are breast fed. Concerns with quality of local milk powder has meant a bonanza for dairy TNCs. Smuggling is a concern and some supermarkets in Europe have placed a limit on purchases as Chinese nationals buy large quantities of formula while visiting.

In July it was revealed that a number of companies including Nestle, Danone, Friesland Campina and Fonterra were cutting prices of infant formula in China after being investigated for their pricing practices under anti monopoly legislation. Later several companies, including Danone, Fonterra, Friesland Campina, Nestle and Mead Johnson were fined a total of $110m  for price fixing.