Japanese food group Meiji Holdings has reportedly announced it will pull out of China’s baby food market, where this summer it was found guilty of breaking competition rules.
According to Reuters, Meiji cited growing competition in China’s booming infant formula sector and the cost of importing milk from Australia.
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“Under the harsh environment, continuing to use Australian milk source is … causing a severe impact on cost and revenue,” Meiji’s Shanghai-based unit was reported to have announced.
Meiji has been importing milk from Australia after China placed import restrictions on some dairy products from Japan following the 2011 earthquake and tsunami that destroyed the Fukushima nuclear power plant.
In August, Meiji was among a group of companies found guilty of fixing prices for infant formula in China.
Six – including Danone and Mead Johnson – were fined. Meiji escaped financial punishment after providing evidence of the activity to Chinese authorities.
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By GlobalDataChina is pushing for consolidation in the sector, arguing that fewer, bigger companies will have higher standards and be easier to regulate. Officials reportedly aim to reduce the number of domestic infant formula firms to between three and five companies with revenues of over CNY50bn (US$8.17bn) by 2018.
Beijing is also said to be set to invest CNY30bn in selected Chinese infant formula firms to help them compete with international rivals.
