Tetra Pak confirms interest in Chinese potential
packaging plant in Beijing, the latest step in its bid to profit
from the rising Chinese interest in dairy products.
The new joint venture facility, operated by Tetra Pak and its Chinese partner, Beijing Pulp & Paper Experimental Mill, cost $80 million to construct, and will allow the Swiss-Swedish company to increase its annual production capacity by some 6 billion packages.
"To meet the rapidly growing demands for liquid food consumption in China, Tetra Pak is taking active initiatives such as additional investment and production capacity expansion to support China's dairy industry and market development," said Nick Shreiber, president of Tetra Pak.
China has increasingly sought foreign investment in a bid to boost its food production capabilities. Last month, Chinese vice premier Hui Liangyu thanked Tetra Pak for its investment in China and the company's contribution to the development of China's packaging and liquid food industries.
China's online news source www.xinhuanet.com quoted Hui as saying that "China's milk, food and packaging industries are of great potential and there is still large room for further cooperation between China and Tetra Pak".
This is evidently a view shared by Tetra Pak. The company has long seen the potential in the Chinese market, investing more than $200 million there since it first entered the market in 1972, and in 2002 the country became the biggest market for the European firm, with close to 7.5 billion packages sold there per year.
Last year, Tetra Pak International committed itself to investing an additional $100 million in the country.The promise was given by Shreiber at a function organised to mark the completion of a new warehouse in Jiangsu Province, and the launch of the company's third phase investment project.
Prospects within the dairy sector are likely to continue to blossom so long as the macro-economic environment in China improves and the consumption capacity of ordinary people increases. According to the Beijing Times, China's dairy industry generated a combined output value of 29.2 billion yuan ($3.52 billion) last year, up 49 per cent from 2001.
Tetra Pak said that dairy product sales in China are expected to grow at an annual rate of 15 per cent over the next five years, and with liquid milk consumption outstripping the rest of the dairy sector, the need for liquid packaging solutions will continue to rise.
Indeed, Chinese government research predicts that, by the year 2010, annual milk consumption per capita will reach 32 kilograms in the city and 7 kilograms in rural areas.
Tetra Pak has processing plants in Beijing, Shanghai, Kunshan, and Foshan in China, as well as business offices in nine Chinese cities, including its headquarters in Shanghai. The company posted sales of nearly CNY5 billion (around $600 million) in China in 2003, roughly 8 per cent of Tetra Pak's total worldwide sales.
