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Fonterra Kicks Off San Lu Joint Venture In China

Fonterra Kicks Off San Lu Joint Venture In China

Fonterra announced today the formal commencement of its joint venture with leading Chinese dairy company Shijiazhuang San Lu Group (San Lu), following the completion of Government approvals and settlement of Fonterra’s 43% stake.

Representatives from both companies were joined by central and local government officials, China dairy industry representatives, and New Zealand Government officials at San Lu’s headquarters in Shijiazhuang, about 320km south of Beijing, to mark the beginning of the joint venture.

Fonterra China Managing Director Bob Major says the joint venture with San Lu represented a significant step in Fonterra’s strategy for growth in the world’s fastest-growing dairy market. “We bring complementary strengths to the joint venture and we are both well-established players in this market – Fonterra as a successful importer for more than 20 years and San Lu, a local manufacturer and leader in branded dairy products in China.”

Mr Major, who managed the establishment of Fonterra’s sales operations in China more than a decade ago [then under New Zealand Dairy Board] says the market outlook was extremely strong, with increasing affluence and modernisation of the industry expected to see the dairy market there double in size by 2010.

“The combination of rising incomes and a growing appetite for dairy is creating huge potential in the China market.”

Mr Major said the joint venture with San Lu reflected Fonterra’s confidence in the future of the dairy industry in China, and also a recognition of the importance of local milk supply and production facilities in meeting the growing consumer demand in China.

“This will give us further opportunities to leverage our expertise across the whole dairy chain in China.”

Mr Major said the joint venture’s first official Board of Directors meeting would be held in July. Three representatives from Fonterra’s management team in China have joined the seven-member joint venture board, and another Fonterra employee has joined San Lu’s senior executive team.


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