As China remains New Zealand's top milk powder destination, New Zealand dairy industry has been exploring more opportunities in the Chinese market with increasing and diverse demands.
New Zealand dairy industry sees great opportunities in China

As China remains New Zealand’s top milk powder destination, New Zealand dairy industry has been exploring more opportunities in the Chinese market with increasing and diverse demands.

“Fonterra continues to see great opportunities in China,” Teh-han Chow, Fonterra Greater China CEO, told Xinhua on Thursday.

New Zealand’s dairy giant Fonterra plans to expand its food service business to more second- and third-tier cities in China by enhancing its products through investment in innovation, continuous menu development, and strengthening its offerings in Chinese cuisine.

“We’re seeing increased demand for health and wellness solutions, especially when it comes to nutrition driven in part by the ‘Healthy China 2030 initiative,’ which is a government-led campaign to improve public health in China,” Chow said.

Fonterra opened its fifth application center in Shenzhen in 2023 and recently upgraded its application centers in Shanghai and Beijing. A sixth Fonterra application center will open in China later this year to support local customers in creating innovative products, he said.

“Fonterra has had a lot of success in China. China is one of Fonterra’s most important strategic markets,” Chow told Xinhua earlier this year.

“The success of New Zealand’s economy is directly related to the success of our exporters,” Prime Minister Christopher Luxon said at a China Business Summit held in Auckland last month.

Luxon said trade is the lifeblood of New Zealand’s economy, supporting a quarter of the country’s jobs, noting that the government aims to build New Zealand into an export powerhouse.

Chinese Ambassador to New Zealand Wang Xiaolong said on the same occasion that there is huge room for the two countries to continue to be mutually helpful partners to empower each other to achieve greater success based on their respective demands and comparative advantages.

“Robust economic cooperation has always been a critical pillar of the bilateral relationship,” Wang said.

New Zealand Trade Minister Todd McClay, also present at the event, said he was confident that New Zealand retains its reputation in China as the world’s leading producer of safe, healthy, natural, nutritious sustainable food products.

 

INCREASING OPPORTUNITIES, DEMANDS

Roy van den Hurk, Milk New Zealand Dairy Limited CEO, said for the past 10 years, China has been New Zealand’s largest trading partner and the largest export destination. Notably, New Zealand has become China’s largest source of imported dairy products, accounting for about 45 percent of China’s dairy import market share.

The increasing demand among Chinese consumers for high-quality New Zealand dairy products has propelled New Zealand dairy brands to quickly become leading imported dairy products in China, van den Hurk told Xinhua.

“These brands connect the entire industry chain from New Zealand farms to Chinese tables, continually driving cooperation, investment, trade, and employment related to the dairy industry between China and New Zealand,” he said.

Thanks to the China-New Zealand Free Trade Agreement (FTA), all dairy products exported from New Zealand to China will enjoy zero tariffs, which opens up broader prospects for the development of the dairy industry between the two countries, van den Hurk said.

The bilateral trade volume reached 38 billion NZ dollars (approximately 23.24 billion U.S. dollars), more than four times the amount when the NZ-China FTA came into force in 2008, statistics show.

 

NEW ZEALAND’S TOP MILK POWDER DESTINATION

Although New Zealand’s milk powder exports to China have fallen recently, mainly quantity driven, China has still remained as New Zealand’s top milk powder destination.

Milk powder exports to China increased 987 percent in value, and 1,004 percent in quantity in the year ended April 2024, compared with the year ended April 2008, the statistics department Stats NZ said last month.

In the year ended April 2024, 30 percent of New Zealand’s milk powder exports were sent to China, and the signing of the FTA with China in 2008 accelerated exports to China, Stats NZ said.

Moreover, there has been more cooperation in the area between the two countries.

In May last year, Chinese dairy giant Yili Group launched a new lactoferrin plant in New Zealand, with an investment of 70 million NZ dollars (43.35 million U.S. dollars) and a capacity of 67 tonnes, which was hailed as a landmark project of China-New Zealand dairy cooperation.

Yili Group, through Oceania Dairy and Westland Milk Products, has invested up to about 1.5 billion NZ dollars (930 million U.S. dollars) in New Zealand since 2013.

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