Japanese milk juggernaut Meiji is reportedly pulling out of China’s baby formula market due to pricing crackdowns and local competition. Though we suspect they’re just jealous that Chinese baby formula is the only formula possibly as radioactive as theirs. Reuters reports:
Meiji said it could no longer stay in the market due to intensifying competition as well as the rising cost of its imported milk source from Australia. All of its four formula brands in China use Australian milk.
“Under the harsh environment, continuing to use Australian milk source is … causing a severe impact on cost and revenue,” its Shanghai-based dairy unit said in a statement posted on its website on Thursday.
In August, China’s National Development and Reform Commission (NDRC) fined a group of mostly foreign milk powder producers, including Danone SA (DANO.PA), a total of $110 million for price-fixing.
Meiji, Nestle (NESN.VX) and Zhejiang Beingmate Scientific Technology Industry and Trade Co Ltd (002570.SZ) were also implicated, but escaped punishment for cooperating with the investigation.
Meiji cut prices on all its products by as much as 7 percent at the time.
Meanwhile, China has emphasized its support for home-grown firms, with local media saying the government will give 30 billion yuan ($4.93 billion) to Chinese milk powder makers to help them compete with international rivals.