Four and a half years after Chinese company Bright Food acquired Israeli food company Tnuva, and one year after the Israel Ministry of Agriculture and Rural Development signed an agreement with Chinese authorities, the Ministry of Economy and Industry and the Ministry of Agriculture and Rural Development have received notice that China will soon officially announce permission for exports of Israeli dairy products to China.

The notification reveals that both Tnuva Dairy and Tara Dairy submitted requests for approval for exports of their dairy product to China. Another interesting question arising from the notice from the Chinese authorities is their attitude toward the Israeli companies' request to export flavored pudding to China. The notice said that Tnuva (through Alon Tavor Tnuva Dairy) and Milko Industries (i.e. Tara Dairy, owned by the Central Bottling Company - Coca Cola Israel), had filed requests to export pudding to China, no special permit was needed in order to do so.

While Tnuva has been working hard in the local market at a time when its market share there is shrinking, what really interested Bright Food, which acquired Tnuva four years ago, was producing dairy products in China using Tnuva's technology. These plans, however, ran into the ground when the Chinese authorities refused to grant Tnuva the necessary regulatory approval for commencing manufacturing. It now appears that it will now be granted approval at least for exporting products made in Israel to China - obviously those with a longer shelf life, such as hard cheese. The question of manufacturing dairy products in China itself, which Tnuva originally hoped to do, meanwhile remains unresolved.

The dairy market for private consumers in China, estimated at $52 billion, is dominated by local suppliers Inner Mongolia Yili Group and China Mengniu Dairy. Research company Euromonitor International says that foreign companies seeking to penetrate the Chinese dairy market, including even Swiss company Nestle, which opened its first plant in China in 1979, have a combined market share in China of only 2%.

Annual per capita milk consumption in China is only 12 liters, compared with 180 liters in Israel, 210 liters in the US, and 300 liters in Europe, but it has tripled in the past decade, and is projected to continue growing.

Bright Food, China's second largest food group, owns four successful Chinese food companies, all of which are listed on the Shanghai Stock Exchange. The most prominent is Bright Dairy and Food, the second largest dairy company in China.

Published by Globes, Israel business news - en.globes.co.il - on October 25, 2018

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