How is China’s largest dairy producer benefiting by entering Pakistan?

The entry of Asia’s largest dairy products producer, Yili Group, into Pakistan was taken positively in Pakistan stock market, as the company plans to take a majority stake in Fauji Foods to increase its international presence.

Yili Group has come a long way since its humble beginning as a small dairy-product processing factory in Inner Mongolia in 1993. The company is now ranked the largest dairy producer in Asia and the eighth largest in the world, as per the South China Morning Post.

The company now wants to increase its presence on the global stage and in order to do so it needs to increase its sales channels and find cheaper raw materials. Here comes Pakistan, which can provide the much needed raw material as it boosts one the world’s biggest herds and is among the top milk producer in the world.

“The deal could help the company to expand its sources of good quality raw materials and is therefore very significant,” said Zhu Danpeng, an associate with China Branding Research Institute, quoted SCMP.

“The internationalisation of Chinese companies is inevitable, the only question is which approach is best for them,” said Zhu.

On Tuesday, the Inner Mongolia Yili Industrial Group Company Limited expressed its intention to acquire a majority stake with management control in Fauji Foods Limited (FFL) in a notice sent to the Pakistan Stock Exchange. Fauji is engaged in the processing and marketing of dairy products, juices and jams in Pakistan.