Swiss food and beverage giant Nestle yesterday inaugurated a new milk product factory in northern China's Inner Mongolia Autonomous Region in a move to take bigger share of the Chinese market.

With an initial investment of 130 million yuan, the Nestle Hunlunbuir facility is the company's third dairy factory in China, following one in Shuangcheng, Northeast China's Heilongjiang Province and an operation in Qingdao, East China's Shandong Province.

Nestle's wholly owned Hunlunbuir factory will make milk powder by processing some 600 tons of milk a day, said Peter Brabeck, chairman and CEO of Nestle Group Worldwide.

Nestle, which does not own farms in the Inner Mongolia, procures fresh milk from 40,000 farmers, generating a total regular income of 3 million yuan a day.

As a multinational company with over 140 years of experience in the dairy business, Nestle has standardized milk collection among dairy farmers, replacing the old-style system of collection on the street.

"The company applies better hygienic conditions and stricter quality standards to milk collection," said He Haijun, a dairy farmer. "At the beginning we did not understand, as this overturned our traditional ways of diary farming that pin so much hope on the weather and climate, but we did learn a lot in the process."

Head of Nestle's Greater China region Josef Mueller said the company selected the location a few years ago due to the region's rich natural grasslands. The move also draws Nestle closer to its Chinese competitors, whose large milk producing facilities are also located in the Inner Mongolia.

In another development, the company expects to open its second research and development center in China next year. According to Brabeck, the new center in Beijing will feature research, as its first in Shanghai is focused on product development.

(China Daily July 6, 2007)