China's Tingyi, Japan's Wakodo form milk powder joint venture in China
The deal comes at a time when the Chinese government is cracking down on corruption in the infant mi…The deal comes at a time when the Chinese government is cracking down on corruption in the infant milk formula sector, a $12.4 billion market expected to double by 2017, and when Japan's Meiji Holdings Co Ltd is pulling out of China due to strong competition.
The joint venture of Tingyi (Cayman Islands) and Wakodo Co Ltd, Asahi Group Holdings Ltd's unit that makes baby food, will have registered capital of $5 million and will mainly be marketing and selling baby products.
The venture, in which Tingyi will hold a 45 percent stake and Wakodo the rest, is awaiting approval from relevant authorities, Tingyi said in a statement on the Hong Kong stock exchange.
With history of 107 years, Wakoda manufactures infant and follow-up formula, baby foods, beverage for babies, as well as prepared foods for the elderly.
Foreign firms control around 40 percent of the baby formula market in China. Among foreign brands, Mead Johnson Nutrition Co holds the biggest share, followed by Nestle and Danone, according to data from Rabobank and Euromonitor.
The sector has been embroiled in corruption scandals this year, with Chinese media repeatedly accusing foreign firms, notably France's Danone SA, of paying bribes to medical staff in return for recommending their brands.
