Christopher Adams

The Business Herald’s markets and banking reporter.

Formula firm back on track

Long-awaited regulatory approval from Chinese officials is good news for New Image.

New Zealand's retail-ready infant formula exports to China are worth about $200 million a year. Photo / Christopher Adams
New Zealand's retail-ready infant formula exports to China are worth about $200 million a year. Photo / Christopher Adams

Auckland infant formula maker New Image says it is "getting back into production" for the Chinese market now it has finally received clearance to export its products after a major regulatory overhaul in the world's second-biggest economy.

New Zealand's burgeoning baby formula manufacturing industry was thrown into disarray on May 1 when the new regulations, aimed at bolstering consumer confidence in China, came into force.

New Image was not approved in the first round of registrations by China's Certification and Accreditation Administration, which cleared firms including Fonterra, Danone-owned Nutricia and GMP Pharmaceuticals for export.

New Image general manager Guy Wills said the firm's registration, which it received last month, meant the company could resume production of "consumer ready" infant formula for China.

The company had invested heavily in developing its Chinese business, he said, and being restricted from that market had cost "millions".

"Of equal concern was the potential for the market to misunderstand the delay in registration," Wills said. "The delay was not about compliance, but having to wait for the registration process to be completed."

He said the delay had resulted in some redundancies at New Image, but the firm was looking to increase staff as it re-established its business.

Auckland formula maker New Zealand New Milk also gained registration last month, as did A2 Milk, which began selling its Platinum brand in China last year. NZX-listed Synlait Milk is still awaiting its Chinese registration after completing construction of a new infant formula packing and blending facility at its Canterbury plant, which was commissioned in June.

Marketing manager Michael Wan said the next step was to obtain approval of Synlait's risk management plan from New Zealand's Ministry for Primary Industries.

"We are confident of receiving the required Chinese regulatory approval to export finished infant formula into China following the approval of this plan."

Wan said the regulatory changes had caused some short-term disruption and, as previously reported, the company was unlikely to meet its forecast sales target for the 2014 financial year.

New Zealand's retail-ready infant formula exports to China are worth about $200 million annually.

- NZ Herald

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