Milk firms on best behavior

As a result of scandals over tainted milk in China in recent years, the country's dairy companies are having to be extra vigilant that their products adhere to safety standards. Among them is Huishan, the largest dairy producer in Northeast China. Founded in 1951, it has three infant milk powder factories that can produce 160,000 metric tons of powder a year.

The company listed on the Hong Kong Stock Exchange in September last year in a $1.3 billion (1 billion euros) IPO.

It covers the entire dairy production chain from growing and processing feed for cows to dairy farming and manufacturing and selling dairy products under the Huishan brand.

Michelle Chan, the company's head of investor relations, says a joint venture it has with FrieslandCampina is important as it acts as an endorsement from a well-known international brand.

"The joint venture is uniquely positioned to meet demands of Chinese consumers for high quality, locally produced infant milk formula. The joint venture benefits both companies for market expansion and penetration."

Huishan claims to be the only Chinese company that can produce all of the required raw milk for its own liquid milk and milk powder products, thanks to its massive self-operated farms.

In the financial year ending March, Huishan's turnover was 3.53 billion yuan ($575 million; 460 million euros), 38 percent higher than in the previous financial year.

In March, Huishan had a little more than 144,000 head of Holsteins and Jerseys on 59 dairy farms and more than 16,000 hectares of feed crops planted. During the financial year it produced 501,700 tons of raw milk.

Huishan sold liquid dairy product worth 2.3 billion yuan last financial year. The market research firm Frost & Sullivan says Huishan's liquid dairy products account for 19.5 percent of China's overall retail market.

Huishan vaunts its quality and safety controls. Its products are assessed by SGS SA (formerly Societe Generale de Surveillance, a top Switzerland-based inspection company) for its quality. Quarterly testing on somatic cells of Huishan's raw milk is done in accordance with European Union standards.

Chan says: "Recurring scandals in China relating to dairy products have eroded consumer confidence and increased scrutiny in the dairy industry, and have underlined that Huishan is heading in the right direction."