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Dairy giant to milk profits with ice cream venture
( 2002-04-09 09:59 ) (1 )

An ice cream project reinforced by 60 million yuan (US$7.3 million) had business chiefs licking their lips when it was put into operation in the city on Monday.

It is the latest move by Inner Mongolia Yi-Li Industrial Group as part of its efforts to compete with overseas and domestic counterparts in the local market.

The project - which will boost development of its Shanghai Yi-Li AB Foods Co Ltd - is located in the city's Minhang District and will aid the establishment of a nationwide production base for the firm.

"We are restructuring the group by setting up factories in the country's major cities," said Yi-Li President Yang Guiqin.

"Shanghai is China's most mature market and this makes our investment worthwhile."

The project uses equipment from Italy and Denmark, and will increase Yi-Li AB's daily production from 130 tons of ice cream to 260 tons, turning it into the city's largest producer of the dessert.

China consumes 1.4 million tons of ice cream annually with one-fourth sold in Shanghai, Beijing and Guangdong Province.

As the nation's key ice cream market, Shanghai sells 80,000 tons annually for a combined value of 1 billion yuan (US$120 million). Yi-Li accounts for 20 per cent, said Lu Xianghua, secretary-general of Shanghai Frozen Foods Association.

Statistics show that per capita annual consumption of ice cream in the United States amounts to 22 litres but it is only one litre in China.

Lu said many factories are showing faith in the ice cream market by expanding their share through fierce competition.

The result is that Shanghai's original 208 ice lolly producers have been reduced to less than 40, leaving space for overseas and domestic giants to expand.

"China is entering a grown-up period of ice cream production with an annual rate of increase of 30 per cent," Yang said.

Yi-Li has mapped out a blueprint which targets the establishment of more factories nationwide using foreign advanced technology.

"Using overseas state-of-the-art technology is the only way to shorten the distance between us and foreign counterparts in this area."

The group has formed three production bases in Inner Mongolia, North China and Northeast China by co-investing 250 million yuan (US$30 million) with Daqing in Heilongjiang Province in launching China's largest project to process 600 tons of fresh milk daily into milk powder.