Due to Chinese dietary patterns and lower living standards, the routine consumption of dairy products is limited across the country. China is currently the third-largest dairy producer in the world, after India and the United States. However, per capita consumption of dairy products in China is less than one-quarter of the global average and lower than in many other developing countries. Moreover, dairy product consumption varies considerably across China. Consumption in rural regions is less than 10.0% of that in urban areas.
After strong and steady growth for more than a decade, China's dairy industries were severely affected by the melamine scandal of September 2008, when melamine was found in infant formula and other milk products. This major incident led to the bankruptcy of Sanlu, the largest milk powder producer in China, and plummeting confidence in domestic dairy brands. International trade was also affected as exports dropped to almost zero in October 2008. Meanwhile, imports increased sharply.
The melamine incident, together with the global economic downturn that started in late 2008, led to weak industry growth in 2008. Industry revenue increased by 10.7% in 2008, significantly lower than the five-year annualized growth rate through 2013, which is expected to be 12.5%.
For more information on the China dairy product production market, please click here: China dairy product production market
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