Baby formula bar raised

Number of infant formula producers/brands

China has raised the market entry threshold for both domestic producers and importers of baby formula, a move aimed at ensuring safer products for babies in the country, experts noted on Monday.

So far only 82 out of the total 133 baby formula producers in the country have passed the review of the China Food and Drug Administration (CFDA), the agency announced on Friday.

Companies that have passed the review include a Tianjin branch of Inner Mongolia Yili Industrial Group Co, a Hebei branch of Sanyuan Group and Beingmate Baby & Child Food Co.

Among the 51 companies that did not pass the review before the deadline, 23 have applied for an extension of the review deadline and 14 have chosen to produce raw materials for the sector instead. Five companies that failed to get the approval will have to halt production of baby formula and the remaining nine have applied to annul their production permit, the CFDA said.

In December 2013, the CFDA released a set of rules that had posed stricter standards for domestic infant formula production. According to the rules, domestic producers needed to pass a review by May 31 - otherwise they will have to quit the business.

"The quality of domestically produced baby formula is expected to be raised as companies are applying higher standards," Song Liang, a dairy analyst at Distribution Productivity Promotion Center of China Commerce, told the Global Times Monday.

Song said that competition in the sector is fierce and another 20 companies among the 82 that have passed the review are expected to get weeded out due to a tough market.

China is expected to see the number of domestic baby formula producers to shrink to around 50 by 2018 and the top 10 companies are expected to account for around 80 percent of the market share, according to a plan from the Ministry of Industry and Information Technology in August 2013.

Experts said that the government's move to raise standards for producers and to consolidate the industry will help restore consumer confidence.

Many parents have chosen to buy overseas produced baby formula after a contaminated milk powder scandal in 2008 that led to the deaths of six infants.

Jiao Huijiao, a 29-year-old woman in North China's Shanxi Province who is expecting a baby in September, told the Global Times that she would consider using domestic products when the baby comes, as "some domestic firms are also making quality products now."

"The government's move [of raising standards for the sector] will help a bit, but it will take prolonged efforts before consumers could regain faith in domestic products," Wang Dingmian, former director of the Dairy Association of China, told the Global Times Monday.

The entry bar for baby formula imports was also raised. China's General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) on Thursday announced a list of 94 baby formula brands that are qualified for imports.

Previously, the market had around 1,000 imported baby formula brands, according to experts.

Despite a drastic decline in suppliers, "we will not see major fluctuations in prices as the market still has excess supply and companies that are phased out only account for a very small market share," Wang noted.

The list of qualified brands for imports includes brands like Dumex, Abbott and Wyeth.

The AQSIQ said in a statement that the list will be updated in the future to include newly approved companies.

The 94 brands also include Newbaybay, which is using a contract manufacturer in New Zealand but actually is operated by a Chinese company.

A China Central Television report in May 2013 said Newbaybay claims to be a New Zealand brand but its products are not available in the local markets , and it uses a car repair shop as its address in New Zealand.

Some Chinese companies have been using foreign contractors for production, but it does not necessarily mean that they are selling substandard products, according to Song.

"To be included in the list means that the company has met the standards after corrections were made," Song noted.

China now allows 49 overseas contractors, which often produce for multiple brands, to supply baby formula.

Prices for imported baby formula are likely to further drop due to the fierce competition from domestic producers with quality milk source and advanced technology, Song said.