How do domestic milk powder brands compete with "foreign brands"?

On January 1, China began to reduce tariffs on more than 730 products, including foreign milk powder, with an average tax rate of 4.4%. New Zealand infant formula and yogurt also achieved zero tariff. However, under the dramatic tax cuts, several large ocean milk powder brands have not yet made price cuts, but have recently started a round of price increases. At present, the profit gap between “foreign milk powder” and domestic branded milk powder is very different. The average gross profit rate of imported infant milk powder reaches 60%-80%, while that of high-end milk can reach 80%-100%; while that of local brands is approximately 30%. -40% or even less. (The Daily Economic News, January 6)

In the past year, foreign brands of milk powder were not healthy in China and scandals continued. Even so, domestic consumers’ enthusiasm for foreign brands continued to increase, and the profitability of foreign milk powder climbed again and again, far higher than domestic brands.

From the beginning of the year to the end of the year, the problem of foreign milk powder is frequent: Japan's Meiji Milk Powder tests out radioactive metal germanium, and the US milk powder giant Mead Johnson is suspected of causing bacterial infections in infants. New Zealand’s Nueri’s is said to be a “special Chinese” fake foreigner. . According to Ma Ying, deputy director of the Dairy Industry Management Office of the Ministry of Agriculture, before the melamine incident in 2008, the market share of domestically produced milk powder reached 60%, but since then most consumers have switched to foreign milk powder. Currently, foreign milk powder has occupied China's milk powder market. Half of the country.

According to statistics, in the first-tier cities such as Beijing and Shanghai, the foreign brands of infant milk powder have occupied 80%-90% of the market share, and the share of domestic milk powder in the high-end market has been severely squeezed. Can this blame domestic consumers for their "overwhelming love" and not to love national brands? Of course not, we can only blame the domestic dairy companies for being too disappointing.

2008 was a watershed for China's dairy industry. The melamine incident caused the Chinese dairy industry to suffer heavy losses. A large number of consumers in China have lost confidence in Chinese dairy companies. Since then, domestic dairy companies have been chaos, scandals have repeatedly, leather milk, milk powder containing hormones that cause infant precocious puberty, etc., continue to hit domestic consumers. In fact, domestic dairy companies have already entered a state of “loss and loss”. As long as a dairy company has quality problems, consumers will lose one point of confidence in the entire Chinese dairy industry.

From the perspective of the development of the industry, after the melamine incident, the domestic dairy enterprises should have a deep reflection, depending on the product quality as the first life in order to regain the consumers. However, China has a large population base and huge market potential. This has caused quality problems in dairy enterprises that have created problems that are still unresolved. This is nothing more than a superficial denunciation, which will not be a deterrent to companies. The loss of illegal milk prices is far less than the profits earned.

Enterprises are unscrupulous and lack supervision. Faced with milk products with unqualified product quality, consumers will vote with their feet. Enterprises that lack competitiveness in the market may be their ultimate fate. In 2011, China cancelled a total of 15,000 production licenses for the cancellation of food and industrial products companies, revoked 426 production licenses for dairy products companies, and eliminated 40.4% of dairy products enterprises.

The elimination of 40% domestic milk prices means that foreign brands have the opportunity to increase their share of the Chinese market. In July 2011, New Zealand dairy giant Fonterra, which accounts for one-third of global dairy product trade, announced that it will spend 260 million yuan to build a new ranch in Yutian County, Hebei Province. The company also said that in the next five years, it will build a farm in Hebei. It is clear that some foreign brands are not content to simply export their products to China and have begun to build grazing land in China, which is intended to occupy a larger market share in China. With the further reduction of China’s tariffs, it will be even more beneficial for foreign dairy companies to enter China. Domestic milk prices are no longer enterprising, losing the right to speak in the local market is not an alarmist.