China is tightening its regulation over imported baby formula. The quality inspection body issued new rules–unregistered baby formula makers as of May 1st will be kept out of the Chinese market. Among the first batch of registered foreign companies, only 41 of them received authorization to enter.
China’s new import policy has made waves across the baby formula exporting industry in New Zealand. According to estimations by the country’s officials, large shipments will be stuck at China’s port as their manufacturers were not registered in China before May 1st.
Analysts say, the new policy will mainly impact small brands that outsource their production to OEM factories. The tightened policy is estimated to affect about 200 small companies in New Zealand, which means 80% of the country’s baby formula brands would not be able to export to China.
The new policy may also have far-reaching impact on dairy related businesses in New Zealand. Just this week, the country’s biggest dairy packaging service provider, the Sutton Group, was acquired by the French food company Danone. What the new rules may do — is to give larger, registered brands, more exposure to China.
The first approved baby formula exporters include only 5 New Zealand companies. But they make up about 90% of the country’s baby formula exports to China. The New Zealand government says it welcomes China’s move, and hopes that it will help the country’s producers to grow and adapt.