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CFDA Prohibits Outsourcing, Rebranding and Subpackaging of Baby Formula

On 27 Nov, CFDA announced the prohibition of milk powders for infants and young children (0-36 months) produced by outsourcing or sub-packaging in China and released the Rules for Supervision and Inspection on Baby Formula Manufacturers which requires dairy companies to have their own milk sources, R&D abilities and equipment as well as developed quality safety management system. These new policies will drive most milk powder producers out of business and fuel mergers and acquisitions. In the aftermath the larger domestic producers are expected to drastically increase their market shares and their competitiveness with larger foreign multinationals such as Mead Johnson which have held an 80% market share of the premium baby formula together with Dumex, Wyeth, Abbott, etc.

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