Fierce competition leaves most dairy firms losing money

Escalating competition among Chinese dairy firms have shoved most of the domestic dairy firms into deficits and only less than one quarter are making profits inChina, according to latest figures provided by an industrial conglomerate.

Incomplete statistics released by China Dairy Products Industry Association show that 27.5 percent of about 1,600 dairy producers in the country were in the red in 2003, with a total deficit of 510 million yuan (61 million US dollars).

The profit margin for domestic dairy firms continued to shrink in the first half of 2004, during which even two of China's 10 largest dairy producers reported deficit of varying extent

Industry insiders with the association owe this largely to the unbalanced industrial development as well as the suicidal competition among dairy makers in the past years.

They say the Chinese people's consumption of dairy products has lagged far behind the growing milk processing industry, particularly in the rural areas where residents are yet to include milk into their diet.

The country has made substantial progress in helping improve its people's health by diversifying their food mix in the past decade, including urging people to drink more milk or soybean milk instead of solely eating porridge for breakfast in their daily life.

Official figures show China's annual per capita milk consumption averages 8.6 kg, compared with 100 kg in other Asian countries and 300 kg in the West.

Source: Xinhua