By LIAM DANN
Fonterra's joint-venture agreement with Chinese dairy company Sanlu Group is on the verge of completion with just technical details left to be worked through.
Fonterra chief executive Andrew Ferrier said he hoped to have the deal signed in the next few weeks.
"We're very, very close. It's not signed yet
but - to use a basketball term - we've got a full court press on," he said. "Of the outstanding issues none of them are deal breakers."
Fonterra is expected to become Sanlu's second largest shareholder, taking a 39 per cent stake in the company, which is based in China's Hebei province.
Fonterra already has a big presence in China through its sales of bulk milk powder but in the higher value consumer market it is limited to just a few of the major cities.
"What Sanlu is, is mass market penetration across a very big expanse of Chinese geography," Ferrier said.
Once the deal is complete it will still need to go through the process of getting regulatory approval from the Chinese Government.
That would take some time but was not expected to cause any major problems, Ferrier said.
"We're getting very positive signals from all levels of the Chinese Government. This is exactly the kind of investment they are trying to encourage."
Sanlu would provide the distribution network and Fonterra would provide the branding expertise and experience in the fast moving consumer goods category, he said.
"The wealth in China is going to continue to grow and those companies that have substantial distribution networks will grow and will be successful." he said. "It's not a get-rich-quick scheme - this is a longer term investment for Fonterra."
There would not be big profits in the short term as China was still a relatively small market for its geographic size, he said.
But it was growing fast off a small base and was already Fonterra's fourth-largest market, he said.
