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China Dairy Production: China’s Yili Group to Build World’s Largest Integrated Dairy Production Base in New Zealand

Yili Group, one of China’s biggest dairy manufacturers, has invested more than 3 billion yuan for a dairy project in New Zealand. The project, under the name of Yili Oceania Production Base, was unveiled by the Chinese president and New Zealand’s prime minister on 21 Nov 2014. The Base is expected to become the world’s largest integrated dairy production base upon completion.

Yili recently invested 2 billion yuan in its production base located in Walmate in New Zealand’s South Island. The investment will be mostly spent on the construction of four facilities to cover raw milk processing, UHT liquid milk, milk powder production and milk powder product packaging. The biggest emphasis will be placed on milk powder production which received a 1300 million Yuan investment. Statistics suggest that in just two years Yili’s capital input to milk powder in New Zealand alone has exceeded 2500 million yuan.

According to experienced dairy analyst Song Liang, as New Zealand was the first developed country to sign a Free Trade Agreement with China it has many more advantages compared to its neighbor Australia. It will take at least 4 to 5 years before the newly signed free trade tariff policy between China and Australia is implemented. Besides, the current export tariff in Australia is as high as 10%-15%. Therefore, countries like New Zealand have a natural edge and represent an attractive prospect for Chinese investors.

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