Japan’s Meiji to Stop Baby Formula Sales in China on Competition

Japan’s Meiji to Stop Baby Formula Sales in China on Competition

Meiji Co., the Japanese confectioner and dairy products maker, said it will stop selling baby formula in China due to rising material costs and intensified competition in the world’s most populous nation. “There are so many players in the market,” Junji Ohashi, a spokesman for parent Meiji Holdings Co. (2269), said by phone today. “Our sales fell to one third of the peak in 2009.”China’s baby food market is dominated by Western and local brands such as Mead Johnson Nutrition Co. (MJN), Hangzhou Beingmate Group Co. and Danone. Meiji didn’t rank in the top 10 milk formula brands in the country last year, according to a Euromonitor International analysis of market share in the country.

China in August fined six dairy companies including Mead Johnson and Danone a combined 670 million yuan ($110 million) for price fixing, a record penalty for violating anti-monopoly laws. While Meiji was also probed, the company wasn’t fined because it cooperated with the investigation, it said in August.

The decision to suspend infant-formula sales isn’t related to the probe, Ohashi said. The company doesn’t disclose sales in China and it only accounts for a small percentage of total sales, Meiji Holdings spokeswoman Sayo Chiba said by phone.

The company will suspend sales as soon as the inventory clears, another spokesman Masanobu Nakamura said. The group continues to sell other products including snacks and ice cream in China, he said.

Meiji Holdings’ sales rose 1.6 percent to 1.13 trillion yen ($11.6 billion) for the year ended March. Net income more than doubled to 16.6 billion yen.

Mead Johnson ranked first in China’s milk-formula market with a 14 percent share last year and Hangzhou Beingmate Group was No. 2 with 10 percent, Euromonitor said. Danone was third with a 9.2 percent market share.

To contact the reporter on this story: Yuki Yamaguchi in Tokyo at yyamaguchi10@bloomberg.net

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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