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.
No Outsourcing and OEM manufacturing
Baby formula manufacturers should not outsource milk powder production, make baby milk powder for other companies or be engaged in fraudulent use of other brands or packages.
Besides, they are not allowed to produce baby formula by canning, bagging or boxing bulk milk powder they purchase from other companies or imported from overseas.
No domestic production of brands registered overseas
Domestic manufacturers should not produce baby formula brands that are registered abroad. Currently over 100 brands marketed in China are labelled “imported baby formula”, while 80% of these are actually produced domestically. Some domestic companies register brands abroad and import milk powder in large containers. This product is then sub-packaged in China before finally being labeled and marketed as “imported baby formula.
One formula, one product
In the past products using identical formulae were marketed under various names and brands. To prevent this, CFDA now prohibits manufacturers from using a single formula (with the same ingredients, processing methods, auxiliary materials) to make product bearing different names. According to CFDA’s investigation, there are more than 8,800 milk powder brands on the Chinese market but the total number of formulae is far less than 8,800. Furthermore, baby formula must be made of milk or milk products produced only using cow and goats’ milk, lactoprotein and lactose.
According to the Rules mentioned above, Chinese baby formula manufacturers are required to have their own milk sources and be able to develop new baby formula products. Much higher requirements for quality and safety control are introduced, such as designating specific quality management personnel, keeping strict record on the sources of raw materials, controlling the production process and inspecting every batch of products to be shipped out of the factories.