Dairy Exports to China Making Recovery | Be Korea-savvy

Dairy Exports to China Making Recovery

(image: Yonhap)

(image: Yonhap)

SEOUL, Oct. 1 (Korea Bizwire)Dairy exports to China are recovering quickly this year after a steep dive in 2017 due to a diplomatic spat, industry officials said Monday.

Maeil Dairies Co. is estimated to have increased its exports to China by 20 to 30 percent in the first six months of this year compared to the same period last year.

“The exports would be similar to the total in the first half of 2016,” a company official said. “Our China exports last year dropped 30 to 40 percent from 2016 due to the diplomatic friction.”

Seoul and Beijing had clashed over South Korea’s decision to host an advanced U.S. missile shield system, known as THAAD, on its soil. China fiercely opposed the move, calling it a threat to regional security, and vented its anger by enforcing trade restrictions ranging from cosmetics, automobiles and foods to tourism.

Local dairy companies have been wooing the Chinese market for its vast consumer population, for instance by aggressively marketing powdered milk. Maeil was the first in the local industry to enter the neighboring market with powdered milk in 2007 and has since been upgrading its products with premium brands.

The firm’s exports to China reached US$31 million in 2014 and grew to $38 million in 2015 and $42 million in 2016 before nosediving to $24 million in 2017.

“Our export goal (for China) is to recover the scale of 2016,” a company official said.

The proportion of China business for Maeil was about 5 percent of the firm’s total sales for 2016, but despite the relatively small share of company performance, China has big potential, industry officials say, especially when dairy companies are trying to make up for the shrinking market for milk.

“It would not be an overstatement that China is the biggest consumer nation of powdered milk, with some 35,000,000 babies being born every year,” one official said. “Some estimates are that the Chinese powdered milk market is about 10 trillion won (US$9 billion) — 40 times bigger than that of South Korea.”

Namyang Dairy Products Co., another local big name in the industry, said it is hopeful that China sales this year will match those of 2016. Company officials said Namyang’s exports to China in the January-August period increased 94 percent from the same months last year.

The company entered the Chinese market in 2008 and sold $35 million worth of products in 2015, growing to $38 million in 2016. Shipments shrank to near $20 million in 2017.


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