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In the News

Danone to form a joint venture and invest in China's biggest dairy producer

High quality food and drinking water are two very important things that China needs.  In a country where it seems so many times like you cannot trust the food you are eating and the water you are drinking, a well known brand like Danone will be most welcome indeed!  It is a definite step forward for wary consumers in China who are tired of, and a little bit afraid of, the continuous number of food scandals that beset the country on an all too frequent basis. Here is what Danone is doing in China...

Danone, owner of Activia yogurt and Evian water, will spend about €325 million to form a joint venture and invest in China’s biggest dairy producer to expand its brands in the most populous nation.

Danone will have an initial indirect interest of about 4 per cent in China Mengniu Dairy, with the aim of increasing that in the future, the Paris-based company said yesterday. It will also set up a venture with Mengniu for yogurt products in China. Mengniu shares surged the most in four years.

The tie-up will help Danone boost sales in China’s yogurt market, which Euromonitor International estimates will grow 57 per cent to 71.6 billion yuan by 2015. Mengniu gains the investment as food scandals including contaminated baby formula, rat meat sold as mutton, and excessive antibiotics in chicken have fuelled demand for better quality control in the world’s second-largest economy.

“The deal will help strengthen the research and development and capability of Mengniu’s yogurt business, and potentially help them increase market share in China,” said Charlie Chen, a Hong Kong-based analyst at BNP Paribas Securities Asia. “Through its ventures with Arla and Danone, Mengniu is also building a better brand image among consumers.”

Market Share Mengniu closed 10.4 per cent higher at HK$27.05 in Hong Kong trading, the biggest gain since April 14th, 2009. It formed a strategic partnership with Danish dairy firm Arla Foods in 2012 to improve quality inspection techniques and explore further co-operation.

Danone shares were little changed at €58.03 as of 12:16pm local time.

Yesterday’s agreement is the first partnership for the French company in China since the end of the one with Chinese drinks maker Hangzhou Wahaha Group in 2009, Agnes Berthet-d’Anthonay, a spokeswoman for Danone, said. – (Bloomberg)



India and China: Building trade and trust

Many of us remember the turbulent and sometimes violent relations China has had with India over the past decades. Somehow, cooler heads have eventually prevailed and all out war between the two nations has been avoided.  In spite of some recent incidents between the military forces guarding the borders, there are some hopeful signs that relations between China and India may be about to improve. 

China's Premier Li Keqiang has arrived in India for his first foreign trip since taking office. It is a sign of improving relations after decades of disagreements between the two countries.

Together, India and China account for more than a third of the world's population, and the two are now looking at ways to work together to boost economic ties and trust.

But amid the talks on trade, there are still lingering disputes over ill-defined boundaries.

The two countries fought a brief but bloody war over disputed territory in 1962 and, just last month, the decades-long dispute over the Ladakh region of eastern Kashmir led to a tense stand-off.

China is a long-time ally and weapons supplier to India's arch-rival Pakistan, while India has irritated China by protecting the Dalai Lama and the self-declared Tibetan government-in-exile.

On a grander scale, China sees itself as Asia's great superpower, while India hopes its growing economic and military might will eventually put it in the same league.

China is India's largest trading partner, but exports remain heavily skewed in China's favor.

A little over 10 years ago, two-way trade was worth just $5bn. Last year it amounted to more than $66bn, but while India exported goods worth $18.8bn to China, China's sales to India were just short of $50bn.

China is the big brother in this relationship, whichever way you look at it.

There is not much to choose between them when it comes to population. China has a little over 1.3bn people to India's 1.2bn.

But China is three times as big geographically, with 9.6 million square kilometers, and the major difference between them: gross domestic product.

Latest figures for China put the value of all goods and services at more than $7tn, versus just under $2tn for India. New Delhi and Beijing have agreed to a bilateral trade target of $100bn for 2015.

So, can the world's two most populous nations resolve their differences and work together?

To discuss this, Inside Story, with presenter Jane Dutton, is joined by guests: Mohan Guruswamy, the chairman and founder of the Centre for Policy Alternatives, and a former adviser to India's finance minister; Andrew Leung, a specialist on China affairs, and former Hong Kong representative to the UN; and Roderic Wye, an associate fellow for Chatham House's Asia programme.


Edward Lehman 雷曼法学博士
Managing Director 董事长

LEHMAN, LEE & XU China Lawyers
Founder of LehmanBrown

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