China demand drives baby formula exports

Photo / Thinkstock

After two years of product development and battles against red tape, an Auckland company's maiden shipment of infant formula left the Port of Tauranga yesterday, destined for China.

Biopure Health's 17,000-can consignment is heading to a market in which New Zealand-made baby formula, as a result of Chinese parents' fears of contaminated milk, commands a hefty premium over locally made products.

One can of Biopure's Infapure formula will retail for around 300 RMB ($62). To compare, a tin of Karicare formula was selling on The Warehouse's website for $21.50 yesterday.

The 2008 Sanlu melamine scandal, in which six babies died after consuming milk products tainted with the industrial chemical, still weighs heavily on the minds of many Chinese parents.

New Zealand supermarkets have had to slap limits on the number of tins a single customer can buy after traders began purchasing large quantities of formula off the shelves and selling it in China.

Biopure, founded and owned by Aucklanders Simon Page and Jane Li, has also established two retail outlets in China - one in Chengdu and the other in nearby Panzhihua - where its formula will be sold.

The stores will open next month, and the couple intend to open a further 10 stores across China by the end of next year.

Page and Li saw the opportunity to establish the firm in 2010 after Chengdu-born Li - who at that time was running an online fashion business - was bombarded with requests for New Zealand-made infant formula from her Chinese suppliers.

"It was clear that there was a massive demand for this country's milk," said 34-year-old Page, who was an analyst at Gen-i before he got into the baby formula trade.

But getting the business to the stage it has reached today was not an easy process.

Page said they initially wanted to sell existing New Zealand-made formula brands in China, but it turned out that those brands already had distributors in that country.

"From there we knew it would be best if we developed our own brand."

The couple approached Auckland health products manufacturer New Image, which developed and now manufactures and packages Infapure.

Page said New Image developed a unique "wet blend" formula that was in high demand in China because it was easier on babies' digestive systems.

Wet blending means all of the ingredients are mixed together in wet, rather than dry powder state during the manufacturing process.

Page said the amount of red tape the company had to pass through to get its products into China could not be underestimated.

"Getting the product certified for importation in China was a lengthy process," he said. "They have thousands and thousands of applications awaiting approval."

Page said Biopure would sell its formula only through its own retail stores and its own website in China, which gave the company maximum control over its supply chain.

However, there was always a risk of someone getting hold of used Infapure cans, filling them withfake product and reselling them, he said.

"We've heard there's a market [in China] for empty [formula] cans."

Page and Li will travel to China this month and spend three months in the country launching the brand.