WELLINGTON, New Zealand (AP) - New Zealand dairy giant Fonterra said Wednesday it's forming a partnership with China's Beingmate to help meet growing demand for infant formula in the world's most populous nation.
WELLINGTON, New Zealand (AP) — New Zealand dairy giant Fonterra said Wednesday it's forming a partnership with China's Beingmate to help meet growing demand for infant formula in the world's most populous nation.
Fonterra, the world's largest dairy exporter, said it plans to take a stake of up to 20 percent in Beingmate, an infant food company based in Hangzhou.
Fonterra said the two companies also plan to establish a joint venture in Australia to purchase Fonterra's Darnum plant. Fonterra said Beingmate will own 51 percent of the joint venture to satisfy Chinese regulatory requirements and Fonterra will supply the plant with raw milk.
Fonterra said its total investment in the partnership would be up to 615 million New Zealand dollars ($513 million). It remains subject to shareholder and regulatory approvals.
Fonterra Chief Executive Theo Spierings said the partnership will be a "game-changer" that will provide a direct line into China's infant formula market.
"By working together with Beingmate, we will strengthen our infant formula brand presence in China and link China to high-quality ingredients from New Zealand," Spierings said.
Many Chinese parents remain skeptical of the purity of local infant formula and prefer to buy more expensive imported products. In 2008, six babies died after local Chinese milk formula was tainted with the chemical melamine.
At the time, Fonterra was a minority shareholder in one of the dairy companies that had tainted its milk. It was applauded by some in China for helping to be a whistleblower in the scandal.
Fonterra is New Zealand's largest business, with annual revenue of $16 billion. It's a cooperative owned by farmers and is a lynchpin of the nation's economy.
In a separate announcement Wednesday, Fonterra said it plans to invest 555 million New Zealand dollars ($463 million) in building a new high-efficiency milk powder drying plant in New Zealand and increasing milk processing capacity elsewhere in the country.