Winston Peters: China is exporting from New Zealand – to itself!

07/04/2017

Four months ago the sod was turned on a new dairy processing plant that is being built just outside Gore in Southland.

The man wielding the spade was the president of China Animal Husbandry Group (CAHB) and the chairman of Mataura Valley Milk, Xue Tingwu of China.

CAHB, a Chinese state-owned company, has a 71.8 percent stake in Mataura Valley Milk. In other words they call the shots in that enterprise.

Good times should be ahead for Mataura Valley Milk, since as Mr Tingwu told a reporter after turning the sod, the infant formula market in China is expected to increase by 80 percent in the next 10 years.

A lot of Kiwis might not have picked up on this but China own, operate and control the infant formula supply chain, from New Zealand, all the way to the baby's mouth in China.

And this is a very important market in China, with 20 million babies being born there every year.

Mataura Valley Milk is far from being alone.

We have. Which New Zealanders might think are Kiwi owned.

They're wrong.

Bright Dairy, China’s third largest dairy company, by volume, got control of Synlait back in 2010.

Synlait's infant formula goes to China.

Then there’s Yashili International Holdings. They entered New Zealand and built a plant at Pokeno to produce infant formula product, none of which is sold to New Zealand consumers.

Next we have Yili, China’s largest dairy company which has built a major plant just north of the Waitaki River in South Canterbury.

The plant is producing milk powder for export to China where it will be used by Yili to produce infant formula. They have just announced a $400 million expansion to include an infant formula canning line.

While all this has gone on Fonterra, New Zealand's largest company, which had a head start on any NZ infant formula exporter to China, has been outgunned and out-manoeuvred.

Right under our noses China has scored a massive coup.

China is exporting from New Zealand – to itself!

All the wealth and the added value is gushing out of New Zealand.

In the space of less than six years, under John Key and Bill English, China has quietly taken control of our infant formula industry – the biggest potential export that we have ever had.

That is appalling.

Winston Peters is leader of New Zealand First.