China: Land of Expensive Milk Powder

China has the world's highest prices for powdered milk. This assessment came from the chairman of a large German dairy company in an interview with the reporter for a Shenzhen Newspaper.

The article also quotes an agent for a foreign milk company who said infant formula produced by Abbott Labs and Mead Johnson that costs 150-to-160 yuan per can in southeast Asian countries costs nearly 200 yuan in China.

The German company official attributed the high prices in China to high distribution costs and taxes on imported milk powder. He said his company has to market its products through dealers and distributors in China. The extra middlemen add costs that are avoided in Germany where they sell directly from the processor to the retailer.

According to agents of multinational companies, many foreign companies entered the Chinese market after the melamine incident. They say there is no other country that has 100 or more powdered milk brands as China has. With so many brands, retailers can pick and choose which brands to carry. According to one industry representative, you can't access a big retail outlet without paying an entry fee of 1 million yuan.

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