Biostime to boost domestic production with dairy purchase

Infant milk producer Biostime announced on Tuesday it plans to acquire a 100 percent equity in a Changsha Yingke dairy factory for 350 million yuan ($57.8 million) to boost its domestic production.

With an annual production of 30,000 to 50,000 tons, Changsha Yingke is a subsidiary of Hunan Ava Dairy Co Ltd, a major Chinese dairy producer known for its Nanshan Bywise brand. After the deal, it will become the first domestic production plant of Biostime International Holdings Ltd.

Experts said the move will enable the company to target a wider group of consumers with a competitive price.

"The company shifting its production base back home will provide an edge for the company in competing with foreign rivals even in third or fourth-tier cities," said Wang Dingmian, a dairy analyst.

The Hong Kong-listed Biostime was fined 163 million yuan last year, when the National Development and Reform Commission, a top economic regulator, levied fines of nearly 670 million yuan against six milk powder companies accused of price fixing and anti-competitive practices.

For the first half of last year, Biostime saw revenue of 1.68 billion yuan, a year-on-year increase of 53.7 percent. More than half of the revenue came from its high-end infant formula milk powder products.

lvchang@chinadaily.com.cn