HONG KONG Nov 1 China's largest instant noodle
maker Tingyi Holding Corp plans to form a joint
venture with Wakodo, a unit of Japan's beer maker Asahi, to sell
infant milk formula and baby products on the Chinese market.
The deal comes at a time when the Chinese government is
cracking down on corruption in the infant milk formula sector, a
$12.4 billion market expected to double by 2017, and when
Japan's Meiji Holdings Co Ltd is pulling out of
China due to strong competition.
The joint venture of Tingyi (Cayman Islands) and Wakodo Co
Ltd, Asahi Group Holdings Ltd's unit that makes baby food, will
have registered capital of $5 million and will mainly be
marketing and selling baby products.
The venture will not be involved in any manufacturing,
Tingyi's CFO Frank Lin told Reuters on Friday.
The venture, in which Tingyi will hold a 45 percent
stake and Wakodo the rest, is awaiting approval from relevant
authorities, Tingyi said in a statement on the Hong Kong stock
Foreign firms control around 40 percent of the baby formula
market in China. Among foreign brands, Mead Johnson Nutrition Co
holds the biggest share, followed by Nestle
and Danone, according to data from Rabobank and Euromonitor.
The sector has been embroiled in corruption scandals this
year, with Chinese media repeatedly accusing foreign firms,
notably France's Danone SA, of paying bribes
to medical staff in return for recommending their brands.