For border officials in Hong Kong, baby formula trumps heroin. Since the former British colony on March 1 restricted outbound travelers to two 2-pound cans each, a syndicate has been cracked and more people have been arrested for smuggling milk powder than were detained all of last year for carrying heroin.
The reason? Mainland Chinese demand, fueled by distrust of locally made food after product-safety scandals that included the deaths of at least six babies due to tainted milk. The U.K. and New Zealand are among countries with limits on milk sales as bulk purchases of brands such as Danone (BN)’s Aptamil and Mead Johnson Nutrition Co. (MJN)’s Enfamil caused local shortages.
“Most of them only have one child, and the child is the most important thing in their life,” James Roy, a Shanghai- based analyst China Market Research Group, said of Chinese parents, most of whom are subject to the government’s one-child policy. “They want to be extra careful.”
The crackdown on milk buyers gives Danone, Nestle SA (NESN), and Mead Johnson an opportunity increase their market share in China at the expense of domestic rivals such as China Mengniu Dairy Co. and Inner Mongolia Yili Industrial Group Co. Read more >>