Retailing, Franchising, and Consumerism Business Intelligence in China

China's Mengniu Signs Framework Agreement With Danish Dairy Giant

Chinese dairy company Mengniu and Danish dairy giant Arla signed a framework agreement for the implementation of a diary technology cooperation center project.

According to the agreement, about CNY220 million will be invested in this new project to introduce Arla's entire industry chain management and practice experience into China to improve the quality of Chinese dairy products to meet the standards of the European Union.

The agreement stated that the new cooperation center will be established in Beijing and the two parties will make exchange and cooperation in four sectors, including pasture and milk source management; dairy production management; product research and development; and customer and consumer relationship management. The first cooperation project of this center will use the advanced technologies and management experience from Denmark to set up quality demonstration dairy farms in China.

Mengniu Group will build modern cow pastures via its pasture subsidiary, and it will adopt Denmark's quality and food security management and monitoring system, including risk identification and control; milk collection management and inspection; milk resettlement model and milk quality system; and milk health and disease control and prevention.

Wang Yansong, quality director of Mengniu, said that with the advanced foreign experience and management technologies, they hope to rebuild consumers' confidence in the Chinese dairy industry. The cooperation between Chinese and Danish dairy companies will be a strong driver to promote the improvement and development of Chinese dairy industry. In 2008, a health scare in post-Olympics China related to melamine in dairy products caused illness and death of Chinese citizens.

Founded in 1863 and headquartered in Copenhagen, Arla is one of the largest and oldest dairy companies in Europe and it is also one of the largest organic dairy suppliers in the world. In June 2012, Arla acquired about 5.9% shares of Mengniu for about CNY1.8 billion, which made it the second largest shareholder of Mengniu following Cofco Group.

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