Click to read the original article for details. Do you still remember the fresh milk sold in hutongs, the 'Red Star' brand instant milk powder, old yogurt in glass jars, and the five-cent cream popsicles? For countless people born in the 1970s and 1980s, these dairy products accompanied them through long years, carrying precious childhood memories and nostalgic feelings. As time passes and living standards improve, 'ordering milk by ration coupons' has become a faded memory. Today, milk has transformed from a privileged 'special supply' to a common item on ordinary people's tables. Dairy products made from milk are countless, and choosing the right product from the dazzling array in supermarket cold cabinets often becomes a happy 'dilemma' for consumers. 'One glass of milk a day strengthens the Chinese people.' As an indispensable industry for a healthy China and a strong nation, today's dairy industry is a representative sector for food safety, a symbol of agricultural modernization, and a strategic industry for the coordinated development of primary, secondary, and tertiary industries. Looking at the development of the dairy industry from the early days of the People's Republic to today, we can see that from a small industry with a late start and low base, the market and output have increased by hundreds of times. The technical equipment and management capabilities of dairy processing enterprises have developed rapidly, and the pace of internationalization has accelerated. Over the past seventy years, China's dairy industry has experienced a tortuous and volatile development, achieving earth-shaking changes. 'The Chinese dairy industry has developed the fastest among the food industries and has achieved brilliant results,' said Song Kungang, honorary chairman of the China Dairy Industry Association. Seventy Years of Development History Looking back at the past seventy years, it is both a history of China's dairy industry development and a history of the struggle of national dairy enterprises. In the early days of the People's Republic, the economy was depressed and everything was waiting to be done. The dairy industry foundation was very weak and developed slowly. According to the China Statistical Yearbook (1980), in 1949, there were only 4 dairy factories nationwide, 120,000 dairy cows, annual milk production of 200,000 tons, and dairy product output of only 1,000 tons. In the following 30 years, China's dairy industry utilized resource advantages to vigorously develop dairy livestock, restore productivity, renovate, expand, and build new processing enterprises, introduce advanced Western technology and equipment, and increase production capacity. After 30 years of tortuous development, by 1978, the number of dairy cows had increased to 480,000, annual milk production reached 970,000 tons, and dairy product output reached 47,000 tons, about 50 times that of 1949. With the deepening of reform and opening up, people's living standards improved. In the process of national modernization, the dairy industry also welcomed spring. Since the reform and opening up, China's rural areas have implemented the household contract responsibility system, and dairy livestock raising has also adopted this method. To achieve multi-channel management, more than 90% of regions encouraged farmers to increase investment in dairy products, establish complete milk source storage bases, guide enterprises to develop in the processing field, achieve intensive management, and greatly improve the quality and output of dairy products. Data shows that from 1978 to 1998, China's dairy products maintained rapid double-digit growth, with milk production and dairy product output reaching a small peak every three years. Overall, milk production and dairy product output have increased by hundreds of times compared to before. After 2000, the dairy product market gradually became saturated. After a period of structural reform to address overcapacity, the overall market operation improved significantly, and people's demand for dairy products increased greatly. Among them, liquid milk, which occupied the main market, grew rapidly at an average annual rate of 60%. After the 2008 'melamine' incident, the quality of dairy cow breeding and raw milk, the technical level of processing enterprises, and inspection methods were greatly improved. After three stages of development, China's dairy industry has grown by leaps and bounds. Data shows that in 2016, China's total milk production reached 37.12 million tons, an increase of 185 times compared to 200,000 tons in 1949. As of November 2018, there were 589 dairy enterprises above designated size in China, an increase of 147 times compared to 4 in 1949. From the perspective of the growth in daily liquid milk supply by enterprises, in 1978, Beijing and Shanghai produced about 80 tons and 130 tons of pasteurized milk (fresh milk, low-temperature milk) respectively. By 2016, based on estimates from several low-temperature milk enterprises such as Beijing Sanyuan, the daily liquid milk supply in the Beijing market reached 250 tons, and Shanghai about 540 tons, both several times higher. 'From raising cows and establishing small processing plants to developing modern factories, the development history of our dairy enterprises is also a mirror of China's dairy industry development,' said Wang Jinghai, chairman of Heilongjiang Wondersun Dairy Co., Ltd. When recalling the development of dairy enterprises in the past decade, Song Kungang believes that 'a decrease in number and an increase in scale' is a major feature. He lamented, 'These enterprises in the dairy industry have disappeared batch by batch, and new ones have been built batch by batch. This is what impressed me the most.' In 2007, there were nearly 1,600 dairy enterprises in China, nearly three times the current total. Because the previous enterprises were small in scale and had poor technical equipment, some were naturally eliminated during development, while the surviving enterprises and new enterprises are all developing into large-scale enterprises, leading to a decrease in the number of dairy enterprises. The decrease in the number of enterprises means that market concentration has increased, and market share has begun to shift to large enterprises with high brand awareness, strong strength, and significant economies of scale. In particular, some large dairy enterprises have expanded their scale through asset restructuring, mergers, and acquisitions, strengthening control over milk sources and sales channels. Industry insiders believe that this concentration trend will become more obvious in the future. National market share is highly concentrated in first-line brands, and regional market share is highly concentrated in strong brands. For small and medium-sized enterprises without competitive advantages in products and channels, they may face elimination. Interestingly, looking back seventy years, in the past, dairy products were mostly 'imported,' but today, with the support of a series of national policies, a group of Chinese dairy enterprises such as Yili, Mengniu, Guangming, Junlebao, and Feihe are accelerating the pace of internationalization, setting sail and actively 'going global.' As one of the typical enterprises 'going global,' becoming an international dairy brand has been a goal set from the birth of Mengniu Group. On the first day of Mengniu's founding, founder Niu Gensheng proposed the grand goals of Inner Mongolia cow, Chinese cow, and world cow. Looking back now, Mengniu has actually completed the Chinese cow stage and is now moving towards the world. 'If foreign people believe in our Chinese brand food, I believe it will be a great boost to the image of our entire country,' said Lu Minfang, CEO of Mengniu Group. He believes that for Mengniu, how to make a good global layout naturally aligns with China's 'Belt and Road' initiative. Chen Yu, a dairy expert from the Ministry of Agriculture and Rural Affairs, believes that today's dairy enterprises 'going global' is not only based on considerations of brand and raw materials, 'To become a truly multinational enterprise globally, we must actively 'go global,' build a new competitive ecosystem, and actively enter the era of international competition 2.0.' In the long run, the global dairy industry will face a trend of great integration, and Chinese dairy enterprises will also face unprecedented challenges and opportunities. From 'Luxury Goods' to 'Daily Necessities' 'When I was young, being able to drink a glass of milk was a very happy thing,' recalled Wang Jinghai, chairman of Heilongjiang Wondersun Dairy Co., Ltd. In the early days of the People's Republic, dairy products were scarce and expensive, not affordable for ordinary people. Data shows that in Shanghai before liberation, the price of a glass of milk was equivalent to the total daily income of an ordinary family, which could be called a 'luxury item' for people at that time. After 70 years of rapid development, the original 'luxury item' has long since flown into ordinary people's homes. Data shows that the current per capita milk consumption in China has increased from 6 kilograms at the beginning of reform and opening up to more than 36 kilograms, a five-fold increase in 40 years. 'In the past, 'three dishes and one soup' was a reflection of a well-off life. Now, a glass of milk every morning has become the pursuit and aspiration of the people for a better life,' said Liu Chunxi, vice president of Inner Mongolia Yili Industrial Group Co., Ltd., when talking about changes in dairy consumption. 'China's dairy products have achieved 'from nothing to something' and 'from something to excellence,' which is a huge change,' said Wang Jinghai. Indeed, from fresh milk, fermented milk, milk powder, and children's milk to lactic acid beverages and plant protein beverages... With the continuous advancement of dairy industrialization technology and the continuous upgrading of mass consumption, China's dairy products are also being updated and enriched on people's tables. 'Compared with the international market, China's dairy product varieties are also the most abundant, ranking among the top,' Wang Jinghai commented. Among the dazzling array of dairy products, fermented milk is the most commendable. As early as the late 1960s, yogurt that we can drink now appeared in Beijing, Shanghai, Guangzhou, Tianjin, and other places, but it could not be popularized due to the small production volume. In addition, there were also some homemade yogurt in pastoral areas. Since the 1970s, the production of yogurt in China began to start. After 1985, the Inner Mongolia Light Industry Research Institute successfully developed freeze-dried starter culture powder, successfully transporting yogurt from large and medium cities to small cities. After 2010, China began to develop room-temperature yogurt, and since then, yogurt has successfully circulated to more remote rural and mountainous areas. 'In the past, rural consumers could only drink milk powder because pasteurized milk could not be transported,' Song Kungang recalled. Compared with the past, today's advanced technology has not only brought fermented milk to rural areas but also delivered pasteurized milk to more consumers far from cities. According to data from China Market Research CRR, the consumption potential of dairy products in fourth- and fifth-tier cities is gradually being tapped, and the habit of drinking milk in rural areas is also gradually being cultivated. Consumption in third- and fourth-tier cities is developing from ordinary white milk to high-end white milk and room-temperature yogurt, and consumption habits are gradually aligning with first- and second-tier cities, which is expected to become a new core consumption market for dairy products. With the significant improvement in quality of life and the continuous rise in residents' happiness index, more and more consumers have put forward higher-level requirements for nutrition and health, and increasingly pay attention to food safety. Concepts such as organic and all-natural have become important criteria for their product selection. Nielsen survey found that 75% of Chinese consumers are willing to pay a premium for health-oriented foods. Organic and healthy high-end dairy products are increasingly becoming the primary choice for consumers. Since the second half of 2013, industry leaders such as Yili and Mengniu have launched star products like Ambrosial and Pure Zhen, and the trend of product premiumization has strengthened, with the market share of high-end products increasing. 'Dairy products representing nutrition and health have become the basic and essential items to meet consumers' quality life. Yili is committed to creating high-quality dairy products, providing the world with the best products and services, and meeting consumers' higher-level and more personalized needs,' Yili said. At the same time, Chang Cuiqing, vice chairman of the Chinese Nutrition Society, pointed out that the current consumption structure of dairy products in China is still relatively simple, mainly concentrated on milk powder consumption, and liquid milk consumption is also limited to large and medium cities. In developed countries, in addition to milk, the consumption of yogurt, cheese, whey protein, etc., is also large. In Song Kungang's view, the protein in cheese is easily absorbed by the human body and basically does not contain lactose. It is a nutritious and healthy dairy product, but cheese consumption in China is still in its infancy, and the vast majority of Chinese people basically do not consume cheese. Data shows that currently, China produces about 10,000 tons of cheese annually and imports about 20,000 tons, while the United States produces more than 4 million tons annually. 'In the future, consumers' demands for high-quality and personalized products will become stronger and stronger,' said Liu Chunxi, vice president of Inner Mongolia Yili Industrial Group Co., Ltd. In recent years, dairy enterprises have strengthened the segmentation of markets and consumer groups, launching products for different groups to meet different needs. Wang Jinghai also believes that in the process of high-end consumption and mass consumption going hand in hand in the future, the product structure of enterprises will undergo tremendous changes. 'The new era should solve the problem of meeting the needs of new era consumers, which is the main direction of supply.' Ten Years of Great Changes Since the founding of the People's Republic, the government has attached great importance to food quality management, especially after the reform and opening up, which developed rapidly. However, due to the imperfect quality supervision standard system and inadequate monitoring and management systems, there have always been deficiencies in the quality supervision of dairy products. 2008 was a significant year for all dairy industry people and a huge turning point. The pain of the 'melamine incident' sounded an alarm for everyone. The incident not only exposed the lack of social responsibility of dairy production and raw milk purchasing enterprises such as Sanlu but also reflected problems in the national dairy industry's product standards, industry supervision, product testing, and traceability systems. For a time, consumer confidence in domestic dairy products fell to a low point. After that, dairy industry people worked hard and learned from the pain. Processing enterprises have carried out technical transformation and equipment updates, and stepped up efforts to improve production management. Lu Minfang once said that facing the drastic changes in the internal and external environment of China's dairy industry, Mengniu actively carried out quality upgrades in adversity, adopted the world's leading digital quality management system, aligned with international standards, and continuously worked on milk sources to ensure milk quality from the source. More importantly, a series of policies formulated by relevant regulatory departments have also improved and leaped the quality of the dairy industry. The Food Safety Law, the Regulations on the Quality and Safety Management of Dairy Products, production licenses, and the registration of infant formula recipes... There are countless relevant management regulations and standards. Song Kungang said that although there is still room for further revision, China's current management regulations and standards for dairy products are complete. At the same time, China's management of the production and sale of dairy products is also very strict. For example, selling dairy products, especially infant formula, must obtain a distribution license issued by the industrial and commercial department. More noteworthy is the traceability system. China requires all dairy products to establish a traceability system, ensuring that raw material sources can be traced, product quality problems can be held accountable, and sales destinations can be traced. 'After 2008, we deeply learned lessons and established a relatively complete dairy quality and safety testing system,' said Wang Jiaqi, director of the Dairy and Dairy Product Quality Supervision, Inspection and Testing Center (Beijing) of the Ministry of Agriculture and researcher at the Chinese Academy of Agricultural Sciences. He previously stated that China's current testing of dairy products includes four major indicators: nutritional indicators, hygiene indicators, health indicators, and pollutant residue indicators, which can timely and accurately grasp the quality dynamics of dairy products and effectively warn and prevent quality and safety problems. Under heavy governance, remarkable results have been achieved. According to the results of food supervision and random inspections published by the State Food and Drug Administration, the pass rate of dairy products in the random inspection results of 34 major food categories is above 99.5%, higher than all other food pass rates. According to the inspection results, in 2017, the overall pass rate of infant formula reached 99.7%, of which it reached 100% for 5 to 6 consecutive months. Wang Jinghai said that after 2008, the state made three major policy adjustments for the dairy industry, laying a policy and legal foundation for the upgrading of the dairy industry. 'First, the introduction of breeding industry standards made a huge step from the past small-scale household scattered breeding to large-scale breeding. Second, the national quality standards were benchmarked against the 'four strictest' and aligned with international standards, achieving batch-by-batch inspection and sample-by-sample inspection, with testing standards reaching the international top level, changing the adverse impact of the quality of China's entire dairy industry internationally. Third, the State Council issued the National Dairy Industry Development Plan (2016-2020), which made a series of regulatory requirements on industrialization, scale, standardization, modernization, and intelligence, giving the dairy industry a basis to follow and leading the future development of China's dairy products.' Song Kungang frankly said that the standards formulated by China are currently one of the strictest in the world. 'From the perspective of product quality, we have no gap with foreign countries, at least they should be equivalent. Taking infant formula as an example, we should at least be equivalent to foreign countries.' 'The great changes in the past decade have made our dairy products faster, better quality, and more internationally prestigious than the previous fifty years,' Wang Jinghai said proudly. 'Especially infant formula, from the past standard of simply meeting basic needs to now having a place internationally, is something our dairy industry is very proud of. The safety of dairy products, the commitment to consumers, and the confidence in the national industry have all given us a good development environment and conditions.' 'After ten years of efforts, China's dairy industry has completed a thorough transformation, achieving nirvana and rebirth from the ashes,' said Gao Hongbin, honorary president of the China Dairy Association. Wang Jinghai said that the three major national policy adjustments have enabled dairy enterprises to continuously improve themselves, compete under standards, and learn advanced experience in regulation. 'At present, we still need to do a good job in the industrial chain, produce product quality according to international advanced standards, and ensure that enterprises are responsible to consumers.' Source: Economic Daily - China Economic Net