The Localisation Logic Behind Dairy Firms’ Global Expansion | ESG Helps Chinese Firms Go Global

Summary

Southern Weekly published 'Localisation Logic Behind Dairy Firms' Global Expansion | ESG Helps Chinese Firms Go Global', outlining Mengniu's internationalisation path. Mengniu began its international layout in 2006 and launched a New Zealand milk source strategy around 2009. In 2015, its YoyiC brand entered the Indonesian market through a trade model, and three years later an Indonesian production base was completed and put into operation, becoming Chinese dairy's first wholly owned production plant in Southeast Asia.

In 2016, it took a controlling stake in Australian dairy ingredients firm Burra Foods, and in 2019 completed the strategic integration of Australian organic infant formula brand Bellamy's. As of 2025, Mengniu has production bases in Indonesia, the Philippines and Australia, with brands including Aice and Bellamy's forming a diversified overseas business spanning ice cream, infant formula and dairy ingredients. In 2025, it recorded operating revenue of RMB 82.245 billion, of which overseas business revenue was RMB 4.550 billion, accounting for 5.53 percent.

International business and nutrition and health innovation business are listed as the two core growth directions of the 'one body, two wings' strategy. The article cited the OECD-FAO Agricultural Outlook 2025-2034, which forecasts that by 2034 the contribution of India and Southeast Asian countries to global incremental agricultural consumption will rise to 39 percent, while China's share will fall from 32 percent to 13 percent. On localisation, local employees account for more than 90 percent of the YoyiC factory workforce, supported by the YoyiC Indonesia Training Academy.

Aice has deployed about 600,000 freezers in Indonesia, with mobile sales vehicles covering hundreds of thousands of traditional retail outlets, and has distributed freezers free of charge to poor communities in nearly 80 cities, covering 70,000 poor households. On compliance, Indonesia's mandatory halal certification for food, beverages and other products entered a new implementation phase from October 2026 and covers imported products; Vietnam's extended producer responsibility (EPR) declaration mechanism took effect in May 2026; and the Philippines has tightened regulation of nutrition and health claims. Mengniu has total global annual production capacity of more than 14 million tonnes and operates eight global R&D bases, including a European Innovation Centre, an Indonesian R&D centre, an Australian Bellamy's R&D centre and a North American forage R&D base.

In 2025, its self-developed probiotic strain Lc19 offered a Chinese solution in the global blood sugar control field. At the 2026 China Dairy Conference, Mengniu Group President Gao Fei said Chinese dairy faces three structural contradictions: insufficient product category diversity, imbalanced supply and demand, and insufficient industrial chain resilience. He proposed serving as a 'chain leader', 'captain' and 'fleet commander'.

The article summarised three lessons: ESG layout must be front-loaded, trust must be built through deep localisation, and long-term competitiveness must be built through industrial chain collaboration.

Commentary

Mengniu's localisation practices in Southeast Asia offer New Zealand's small and medium-sized dairy firms a window into Chinese dairy's global expansion. New Zealand dairy exports account for about one-third of global trade, with firms such as Fonterra long dominating raw milk supply, but branding and localised operations are not their strong suit. Through its Indonesian factory, Mengniu has achieved 90 percent local employees, deployed 600,000 freezers to reach lower-tier traditional retail channels, and front-loaded compliance systems such as halal certification, demonstrating the critical role of deep localisation in emerging markets.

Southeast Asian dairy demand is growing rapidly. The OECD-FAO forecasts that by 2034 India and Southeast Asia will contribute 39 percent of global incremental consumption, while local milk sources are weak and rely on imports and local processing. New Zealand firms can learn from Mengniu's experience by shifting from pure raw material exports to brand partnerships or localised production in Southeast Asian markets, with particular attention to regulatory trends such as halal certification and packaging recycling.

Meanwhile, Mengniu's controlling stake in Australia's Burra Foods and integration of Bellamy's show that Chinese capital is deeply participating in Oceania's dairy industry, and New Zealand firms need to assess the space for competition and cooperation. Mengniu's eight global R&D bases and probiotic strain innovation also suggest that New Zealand's small and medium-sized dairy firms need to build advantages in differentiated areas such as functional dairy products.

Keywords: Mengniu, dairy firms' global expansion, localisation, ESG, Southeast Asia, Indonesia, Aice, halal certification, industrial chain collaboration, Gao Fei

Source: Southern Weekly