Nestle Will Invest RMB 2.5 Billion to Build Its Largest Milk Supply Base in China

January 13, 2012 By Sara 180 views Leave a Comment

In recent years, Chinese dairy industry has been frequently involved in safety problems, which greatly weakens the consumer enthusiasm and stirs up consumers’ sensitive nerve; at the same time, some oversea enterprises have cast eyes on China and planned to speed up their investment activities so as to seize more market share in China’s dairy market. On Jan 11th, Nestle and the Municipal Government of Shuangcheng, Heilongjiang Province signed a cooperative memorandum. The two parties will jointly build and develop a modern breeding base. Dick, Nestle president in greater China said, Nestle would invest RMB 2.5 billion on the building of milk supply base in Shuangcheng and this supply base was expected to be the largest one in China.

The municipal party secretary of Shuangcheng, Lu Zhimin said, the large-scale breeding base would contain 187 small breeding areas; it was planed to invest RMB 15 million on each breeding area, hence, the total investment would be more than RMB 2 billion.

In addition, the investment of RMB 2.5 billion will also be on the setup of 3 production demonstration bases and training center on the breeding and management of dairy cattle which is planed to be finished and used within the year of 2021.

According to him, Shuangcheng will substitute the free breeding model with large-scale breeding bases. The construction of all the 187 small breeding areas will be finished in the next two years. The annual milk yield will reach up to 500,000 tons from 400,000 tons, increasing by 25%; moreover, this increase will be under the condition that the number of dairy cattle is unchanged, and if the number of dairy cattle increases, the milk yield will increase accordingly.

Nestle has expanded its plants in Shuangcheng for 4 times, with the total investment increasing from RMB 79 million to RMB 770 million. So far, the investment of RMB 2.5 billion is the largest one and this capital mainly comes from bank loans.