Overview of China's Dairy Industry

China stands as a pivotal force in the global dairy industry, boasting an impressive annual milk production of approximately 36 million tons. The nation has developed a strong processing infrastructure with a capacity to handle around 60.18 million tons of milk annually, underscoring a commitment to quality and efficiency.

Dairy Cattle Management

China has made significant advancements in genetic technology, particularly in dairy cattle breeding. The introduction of advanced genetic chips has revolutionized milk production and improved disease resistance, significantly enhancing productivity and health standards in cattle management.

Milk Production and Processing

The country's robust infrastructure supports the rising consumer demand for high-quality dairy products. Regulatory measures, such as the ban on using dried milk powder for drinking milk, align with both domestic and international standards, ensuring product quality and safety.

Cheese and Milk Powder Production

The cheese sector in China is rapidly expanding due to growing consumer interest. While whole milk powder production is increasing, there has been an 11% decline in skimmed milk powder exports. In contrast, high-protein whey exports from the U.S. to China have surged by 225%.

Key Enterprises

Major players in China's dairy industry include Junlebao Dairy Group Co., Ltd., Bright Dairy Holdings, Yili Group, and Mengniu Dairy. Noteworthy developments include Junlebao's IPO and expansion, Bright Dairy's investments in Synlait, and Mengniu Dairy's recognition as a "Lighthouse Factory" by the World Economic Forum.

Export and Import Dynamics

Despite a decline in skimmed milk powder exports, China's import dynamics remain strong, with imports projected to reach up to 17.18 million tons. The average import price per ton has risen by 10%, from $4,033 to $4,428. Dairy imports have increased by 6% in volume, driven by high-fat products such as butter and cheese, with butter demand soaring by 72.6% and cream by 12.7%.

Market Dynamics and Challenges

The industry faces challenges such as overproduction and shifting consumer preferences. Strategic responses include forming alliances and boosting imports to address demographic changes. Emerging trends include alternative dairy sources like sheep milk.

Regulatory Developments

New regulatory changes are anticipated from September 19, 2025, introducing 50 new national standards and amendments impacting dairy exports from countries like Vietnam.

International Trade Relations

Trade disputes have affected Canadian farmers due to tariffs. Arla Foods Ingredients is expanding its distribution in China in collaboration with Zhongbai Xingye Food Technology (Beijing) Co., Ltd.

Innovation in China's Dairy Sector

Innovation is a driving force in China's dairy sector, with collaborations fostering global market growth. The development of genetic chips is transforming dairy cattle breeding by enhancing milk production and disease resistance.

Special Market Events

Significant market events include Junlebao Dairy's stock offer, Bright Dairy's strategic alliance with Synlait, and the projected valuation of the UHT milk market at USD 15.2 billion by 2034.

Inner Mongolia's Contribution

Inner Mongolia's dairy output exceeded 7.76 million tonnes in 2024, capturing 19% of China's total production. The region combines tradition with modern innovations, significantly contributing to China's dairy production.

Potential for Russian Dairy Producers

The Chinese market holds significant potential for Russian dairy producers, with growing demand for complex dairy products like yogurts and cheeses. However, imports of Russian ice cream have decreased, with July deliveries totaling $194,300, marking the lowest volume in three months.

Conclusion

China's dairy industry is characterized by significant production capabilities, innovative management practices, and strategic international relations. The country maintains stable import volumes, increasing purchases from New Zealand by 6% while importing less from the Northern Hemisphere. Rising consumption of dairy products underscores China's impact on global dairy trade, with Fonterra's Darfield facility struggling to keep pace with China's growing appetite for cream cheese. Despite challenges like retaliatory tariffs, China's demand continues to drive global dairy market dynamics.

China remains an active market for whey protein sales despite a slowdown in cheese sales. Nasonville Dairy reports that while their cheese sales to China have slowed, whey protein sales remain active, demonstrating the global and indispensable value of the commodity.

Modified: 2025/10/14