Small scale and low production levels will hinder the industry's development.

According to statistics provided by the China Association of Diary Industry, the country has more than 1,500 milk product enterprises, with an annual output of 8 million tons.

However, 90 percent are small, with a daily output lower than 100 tons. Only 12 enterprises have an annual sales volume of over US$12 million (100 million yuan).

Shanghai Bright Dairy & Food Co Ltd, one of China's largest enterprises of dairy production, achieved a sales volume of US$265.7 million (2.2 billion yuan) last year. However, it is still hard for the company to compete with the world's famous dairy brands. Nestle, the world largest dairy enterprise, for example, has an annual sales volume of US$13.3 billion, 50 times high as that of Bright Dairy.

The world's top 20 milk enterprises have already entered China's dairy market, since it is believed there are great business opportunities.

China's output of dairy products has increased at an annual rate of 11.6 percent in the past 20 years. The output of fresh milk reached 10.82 million tons last year, a 34 percent increase over the previous year.

There is still a huge market to develop. Production and consumption in China are much less than those of developed countries. The world's average per capita consumption of milk products is over 100 kilograms while that of China is less than seven kilograms.

Experts with the China Association of Dairy Industry estimate that consumption will increase at an average rate of 15 percent in the next five years, which, in turn, will enhance the health of the population.

Since tariffs will be lowered with China's entry into the WTO, more foreign enterprises will come into the huge market, and the prices of foreign products can be decreased.

(China Daily 10/08/2001)