May 16, 2017 12:30 am JST

Vinamilk eyes vast China market

High potential to boost Vietnamese state dairy revenue

China’s Premier Li Keqiang, right, received President Tran Dai Quang of Vietnam in the Great Hall of the People in Beijing on May 12. © Reuters

HO CHI MINH CITY -- Vietnam Dairy Products, or Vinamilk, has signed a memorandum of cooperation with an undisclosed partner in China for exports there, paving the way for its entry into the world's largest dairy market.

The signing took place in Beijing during a visit by President Tran Dai Quang for a Belt and Road Initiative forum from May 11-15.

The memorandum is not a formal contract and therefore not binding, but Vinamilk representatives said it was the start of official Vietnamese dairy exports to the China market, which has 1.3 billion consumers and is valued at about $30billion annually.

Vinamilk wants to raise foreign sales from 18.5% last year to 25% of its target revenue of $3.25 billion in five years' time.

Vinamilk teamed up with its Chinese partner to do market research, and will target major cities and border areas initially. It will focus on formula and condensed milk, and yogurt as launch products.  

A Vinamilk representative told the Nikkei Asian Review that some products are already being traded in border areas informally, but regular trade will require an official channel and distribution networks. The long list of barriers hitherto includes complicated quarantine procedures.

On the sidelines of the forum, the Export-Import Bank of China agreed to provide a soft loan of $250.6 million for an urban railway project linking Hanoi and Ha Dong, the capital's largest suburb, that is due to become operational in early 2018.

Five bilateral economic, technological, and e-commerce cooperation agreements were also signed. Vietnam and China expect to boost overall bilateral trade to $100 billion this year from $72 billion in 2016.

Asia300

Vietnam Dairy Products Corp.

Vietnam

Market(Ticker): STC(VNM)
Sector:
Industry:
Consumer Non-Durables
Food: Meat/Fish/Dairy
Market cap(USD): 9,770.99M
Shares: 1,451.34M

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