Paving the milky way: China dairy giant Mengniu continues expansion plans in Uruguay

This is in line with Mengniu’s ambitious plans to expand globally, due to increasingly fierce domestic competition from fellow Chinese dairy company, Yili Group. 

Lu Minfang, Mengniu’s CEO said, “As the first Chinese dairy firm to go overseas, globalization is one of our top priorities​.”

Lu said the company was banking on innovation to give it an edge in global markets.

He said more resources were being used for innovation: “Last year, we poured a total of 160 million yuan ($23.3 million) in research and development, which was 20% more than that of the previous year​."

The investment is aimed at supporting Mengniu's business in foreign countries, where dairy product markets are already mature.

"Mengniu is eyeing the global market to produce dairy products that can rival top ones in the foreign markets​."

With the opportunities offered by the Belt and Road Initiative, Mengniu is currently present in 10 countries (Australia, Singapore, Malaysia, Cambodia, Myanmar, Mongolia, New Zealand). It recently opened its first South East Asia factory in Indonesia in November 2018.

The udder side​

"The cooperation with Conaprole is part of our goal to leverage international resources to better serve customers both in China and abroad​," said Lu.

Uruguay dairy giant, Cooperativa Nacional de Productores de Leche (Conaprole) is a dairy producer co-operative that processes 75% of milk in Uruguay alone, and is the nation’s largest exporter of dairy products and Latin America's second largest exporter.

It exports to more than 60 countries around the world, which accounts for more than 50% of Conaprole’s sales.

The agreement with Conaprole marks an important step for Mengniu's expansion overseas, as Uruguay is the ninth-largest dairy exporter in the world.

China’s strong and growing demand for dairy products represent a huge potential for both countries trade cooperation.

Chinese products in foreign land​

Liu Peng, a food industry analyst from TF Securities told ChinaDaily​, the challenge lied in whether Chinese firms could succeed in foreign markets and attract local consumers with strong Chinese characteristics.

"Going overseas is never easy and always brings challenges. Running a business in less familiar economies requires us to know better about the local culture, innovate our products and work with the locals​," said Lu.

Mengniu’s shares in Hong Kong have risen from HK$30.25 at the end of June to HK$31.80 as of July 31.