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China: New Infant Formula Policy will Eliminate 80% of Domestic Products


China’s tough new ‘one brand, one formula’ policy for its infant formula market will eliminate over 80% of domestic products currently on sale, according to government calculations.

 

There are currently over 2,000 domestic formula brands on the market in China, according to data from Sohu.com, but officials from the China Food and Drug Administration (CDFA) predict that this number will be cut to around 400 once the new regulations are implemented.

 

‘One Brand, One Formulation’

 

The new Regulations on the Administration of Formula Registration for Infant Formula will require every infant formula brand produced in China to be registered with the CDFA before being sold, including a full list of ingredients.

 

To gain CDFA approval, each brand must have a unique formulation with at least six nutrients different from any other brand. This has been dubbed the ‘One Brand, One Formulation’ policy.

 

Around 40 different nutrients are commonly used to make formula by Chinese manufacturers, according to Sun Baoguo, Vice-Principal of Beijing Technology and Business University, and around half of these nutrients are integral to every product. Most products are therefore distinguished only by which of the 20 remaining supplements they contain.

 

As each brand must have six nutrients different from any other brand, it is likely that companies will only be able to register a maximum of three brands in future and the number of brands on the market will be cut dramatically.

 

Fighting the ‘sub-brands’

 

The new rules are designed to tackle the proliferation of different brands offered by Chinese infant formula manufacturers, according to Ye Jiayun, editor of Dairy Products China News:

 

“It has become common in China for identical or near-identical infant formula to be sold under several, sometimes dozens of different brand names.

 

“Manufacturers will often produce formula in huge batches to cut costs, then sell any leftover formula to distributors at a low price. The distributors then package this leftover formula into many different ‘sub-brands’ to sell in different regions of China.

 

“The distributors often agree only to sell the ‘sub-brands’ in certain regions so the other markets are reserved for the higher-priced, ‘original’ brand sold by the manufacturer.

 

“It is this ‘distributor-oriented’ production style that the CDFA is trying to eliminate with the new regulations, since it confuses consumers and makes it difficult for the government to control the market.

 

“This is why the rules also state specifically that from now on all brands must be sold nationwide,” Ye added.

 

Uneven effects

 

The Regulations are targeted only at brands produced in China and therefore foreign producers and even some large Chinese producers that produce their formula overseas will not be affected.

 

However, a number of experts are already calling for the regulations to be extended to imported products.

 

“The government should also be stricter with cross-border ecommerce and apply the same rules to imported infant formula,” said Liang Song, special economic analyst at the Xinhua News Agency.

 

Have a question about China’s dairy market? Don’t hesitate to get in touch by emailing econtact@cnchemicals.com.

 

For more information about CCM and our coverage of China’s dairy market, please visit www.cnchemicals.com.

 

About CCM
CCM is the leading market intelligence provider for China’s dairy market. CCM offers Market Data, Reports, Newsletters, Import/Export Analysis and a range of Consultancy Services. For more information, please visit
www.cnchemicals.com.

 


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