May 12, 2014
FrieslandCampina-Huishan Dairy propose Chinese infant formula joint venture
China''s Huishan Dairy Holdings Company Limited and Dutch Royal FrieslandCampina N.V. have proposed the creation ofa joint venture to produce, market and sell a new brand of infant formula in China.
The purpose of the joint venture is to operate a fully integrated infant milk formula supply chain. Both companies will continue to run their existing infant milk formula businesses separately.
Using European Union-standard raw milk from Huishan''s dairy farms, the proposed joint venture will leverage the respective experience and expertise of both firms to produce, market and sell high-quality infant formula products.
Under the terms of the proposed venture, FrieslandCampinaand Huishan will jointly own an existing infant formula production plant in Liaoning. The companies already successfully cooperate in the production of non-dairy creamers.
Concurrently, the two companies will continue to run their existing infant formula businesses separately. As such, Huishan will carry on marketing its own brands. And FrieslandCampina''s Friso® brand will still be exclusively produced in the Netherlands and marketed by themselves.
In a document filed with Hong Kong Stock Exchange, Huishan said that the joint venture, if successfully set up, will be mutually beneficial for it and FrieslandCampina.
"The directors believe that the proposed joint venture, if successful, will be an important step for the group to further develop and enhance its production, sales and marketing capabilities. Through the partnership with FrieslandCampina, the group will be able to leverage the experience, know-how and sales network of FrieslandCampina," said the statement.
"The directors believe that the proposed joint venture will mutually benefit the parties in their respective production, sales and marketing capabilities both on a local and international scale," it added.
Huishan is a leading and the most vertically integrated dairy company in China, with its business covering the growing and processing of supplementary feeds to dairy farming to processing and sales of dairy products.
As for FrieslandCampina, in November 2013, together with Wageningen University and Research Centre of the Netherlands and China Agricultural University, it set up the Sino-Dutch Dairy Development Centre to improve dairy production, safety and quality levels throughout the entire dairy chain in China.