China's Bright Dairy & Food Co said Friday the government approved a request by France's Groupe Danone to increase its stake in the major dairy manufacturer to 9.7 percent.

The Ministry of Commerce gave Danone Asia Pte Ltd permission to buy a total of 60.9 million of Bright Dairy's shares from the Shanghai government agency that oversees State assets and from local conglomerate Dazhong Transportation (Group) Co, the dairy maker said in a statement.

The deal will increase Danone's stake from 3.85 percent, making it Shanghai-based Bright Dairy's third-biggest shareholder.

Danone earlier signed agreements to pay the Shanghai Municipal Government 121 million yuan (US$14.6 million) and Dazhong 78 million yuan for their respective stakes.

Consumption of dairy products in Shanghai and other big cities has been growing about 20 percent a year, but foreign manufacturers have found it difficult to make a profit due to the dominance of local producers, which market their products as being fresher than imports.

(Shenzhen Daily April 11, 2005)