China's Dairy Industry Overview

China is a significant force in the global dairy industry, producing approximately 36 million tons of milk annually. The country's processing capacity reaches about 60.18 million tons per year, supported by stringent regulatory frameworks ensuring the quality and safety of dairy products.

Dairy Cattle Management

China employs advanced genetic technologies, such as genetic chips, crucial for modernizing dairy cattle management. These innovations enhance milk production capabilities and improve disease resistance.

Milk Production and Processing

The infrastructure for milk production and processing in China adheres to rigorous quality standards. Regulations prohibit the use of dried milk powder in drinking milk, emphasizing a commitment to high-quality dairy products.

Cheese and Milk Powder Production

China's cheese sector is experiencing rapid growth due to increasing consumer interest. While whole milk powder production is on the rise, there has been a decrease of 11% in skimmed milk powder exports. Imports of high-protein whey from the U.S. surged by 225%.

Key Enterprises

Prominent companies in China's dairy industry include Junlebao Dairy Group Co., Ltd., Bright Dairy Holdings, Yili Group, and Mengniu Dairy. Notable activities such as Junlebao's IPO and Bright Dairy's investment in Synlait highlight active strategies within the sector.

Export and Import Dynamics

China's dairy imports are projected to reach 17.18 million tons, with the average import price per ton increasing by 10% to $4,428. The volume of dairy imports has grown by 6%, with a significant increase of 11.4% in June. The value of these imports rose by 20.6% due to rising international prices.

Market Dynamics and Challenges

The industry faces challenges such as overproduction and shifting consumer preferences. Strategies to address these issues include strategic alliances and increased imports. There is growing interest in alternative dairy sources, including sheep milk.

Regulatory Developments

New regulatory standards are set to take effect from September 19, 2025, influencing dairy exports. Additionally, infant formula manufacturers are required to test for the toxin cereulide, emphasizing product safety.

International Trade Relations

Trade dynamics include Canadian tariffs impacting farmers and Arla Foods Ingredients expanding in collaboration with Zhongbai Xingye Food Technology. Agreements with Hong Kong for dairy and meat exports illustrate active international trade involvement.

Innovation in the Dairy Sector

Innovation is a driving force in China's dairy sector, with developments like genetic chips enhancing milk production. The National Center of Technology Innovation for Dairy leads initiatives, showcased at international forums like the 2025 IDF World Dairy Summit.

Significant Market Events

Significant events include Junlebao Dairy's stock offering and Bright Dairy's alliance with Synlait. The UHT milk market is projected to reach USD 15.2 billion by 2034.

Inner Mongolia's Contribution

Inner Mongolia significantly contributes to China's dairy output, exceeding 7.76 million tonnes in 2024 and accounting for 19% of the national production.

Fonterra's Investment in China

Fonterra's Chinese market generates 30% of its income, with a $1 billion investment aimed at meeting the growing demand for fats and proteins.

Research and Development

Nanjing Agricultural University is advancing research on dairy calves' gut microbiota, contributing to the R&D landscape.

Domestic Milk Production

China's domestic milk production decreased by 6.0% in April due to internal restructuring efforts.

Market Competition and Opportunities

Second-tier companies like Bright Dairy, Junlebao, Feihe, and New Hope Dairy are striving for market dominance. Opportunities exist to broaden collaboration in dairy beyond milk production.

Environmental Initiatives

A project in Shanghai utilized over 6,000 discarded plastic milk bottles in road construction, showcasing innovative recycling efforts.

China-Netherlands Dairy Trade

China is the leading destination outside the EU for Dutch dairy manufacturers, with trade reaching $2.03 billion in 2025.

Nestlé's Modern Cuisine Platform

China is one of the first markets chosen for Nestlé’s Modern Cuisine platform, offering tiramisu and cheesecake solutions.

Sales of Ultra-High-Temperature Long-Life Cream

Sales of ultra-high-temperature long-life cream are increasing in China and South-East Asian markets.

Chinese Buyers and Procurement Strategies

Chinese buyers are adjusting procurement strategies, focusing on spot purchases from regional suppliers.

Regulatory and Safety Standards

China restricts dairy imports from countries with uncontrolled diseases and requires sanitary safety evidence before granting market access.

Cheese Exports

Cheese exports to China increased by 1,000 tonnes, with significant growth outside the EU.

Brand Value

China’s Yili leads in brand value, while Mengniu takes third place. The country is expanding high-level opening up, creating opportunities for foreign-invested companies.

International Market for A2 Milk Products

A2 Milk's products are distributed internationally, including in China. China's dairy industry is turning to international markets as production growth outpaces domestic demand. Danone opens a nutrition research center in Shanghai, supporting research into early-life nutrition, medical nutrition, and healthy ageing.

Major Buyer of Dairy Products

Buyers from China purchased 59% of the volume sold, supporting prices for medium-term delivery contracts. China serves as a quality benchmark for Synlait’s regulatory approvals.

Medical Food for Phenylketonuria

China's first amino acid module, a food for special medical purposes for people with phenylketonuria (PKU), was launched. In China, PKU occurs in about one in 11,000 newborns, and 120,000–150,000 patients are registered nationwide.

Fonterra's Expansion

Fonterra is expanding product development in mainland China through six application centres. The cooperative targets demand for functional proteins and premium grass-fed dairy ingredients.

Genetic Advancements

Superior genetics perform better across different production environments, including China.

Savencia's Investments

Savencia is continuing to invest in China, citing confidence in the market’s long-term prospects. The French group began operating in China in 1996 and operates two factories in Tianjin.

Expected Demand for Dairy Products

Demand for both powders is expected to be strongest over the coming months, including the period immediately before Chinese Lunar New Year celebrations. China International Import Expo hosted Brazilian products. The ninth China International Import Expo in Shanghai featured Brazilian products including Doce de Leite Viçosa.