more details about Yili

December 23rd, 2012

Today’s news brings more details about Yili’s plans for New Zealand, with some analysis, too. Good, because yesterday’s report wasn’t all that informative. And some of today’s extra detail and analysis is quite interesting.

What I found yesterday said that Yili had already bought Oceania Dairy Group. I’m finding it hard to parse tense in this sentence:


The announcement said had bought/will buy 100% of Oceania Dairy Limited through its wholly-owned foreign subsidiary Yili International Development Co., Limited and Hong Kong Jingang Trade Holding Co., Limited, and through Oceania Dairy will build an infant formula project in New Zealand producing 47 thousand tons annually.

I’m pretty sure that the building is future tense because both today’s and yesterday’s reports state that the project needs the approval of the Chinese and NZ governments. But I can’t tell if the buying should be past, present or future. Yesterday’s Dairy Reporter article definitely has the buying done already. The Companies Office lists eight shareholders in Oceania Dairy Ltd, none of which are Yili or Jingang. Once again I’m struggling to find any reports in NZ’s English language media – though I did accidentally stumble across a relevant article on Sky Kiwi. Unfortunately Sky Kiwi doesn’t add any clarity, and the texts of the two articles are so incredibly similar that I have to wonder…

I’m also a little confused about this:


Oceania Dairy has land use rights to build a whole fat milk powder factory. The new project could continue to use or alter Oceania Dairy’s land use rights and resource consent, and Oceania Dairy has rights to purchase land.

Ummm… I’m beginning to suspect that Gucheng articles are just really poorly written, but the above is how I interpret that. Sky Kiwi specifies that Oceania Dairy has rights to purchase 38 hectares of land, but otherwise doesn’t shed much more light – oh, except that its sentence on this aspect is clearer and starts with 目标公司- target company? Does that suggest that Oceania Dairy hasn’t yet been bought out?

Also interesting is the note that from 2003 to 2010, Canadian and European milk prices were relatively high, and Chinese milk prices second only to Sweden, whereas US, South American and Pacific milk prices were relatively low. Comparatively low milk prices combined with the China-New Zealand Free Trade Agreement, which will see import tariffs on dairy products reduced to zero in 2020, make this investment in New Zealand part of Yili’s overseas development strategy.

Judging by reports I’ve read over the last year or so, I suspect many Kiwis would be surprised to hear that NZ milk prices are comparatively low.

And another interesting comment is this:


Wang Dingmian [a dairy expert] thinks that Yili won’t use the “Yili” brand  for its New Zealand-produced milk powder, but would more likely use a new brand, “just like Bright’s New Zealand-made milk powder is not called Bright, but ‘Pure Canterbury'”

Pure Canterbury? Well, apparently yes. And I do seem to vaguely remember reading about it at the time. Synlait is 51% owned by Shanghai’s Bright Dairy.

And why not use the Yili brand? Perhaps because it already carries the taint of past food safety/contamination scandals? Perhaps launching a whole new brand allows them to launch a whole new story with new values that include pure, uncontaminated and safe? Just guessing here, I’m not a businessman.

Unfortunately Oceania Dairy’s own website does less than nothing to shed light on this issue, its latest news being dated 25 February, 2010. I suppose that project near Glenavy, South Canterbury could be the land use rights/resource consent mentioned above, but February 2010 is not far short of three years ago.

So, a bit more detail, but just as many questions as yesterday.

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