William Hui, a Hong Kong businessman and owner of Australia’s largest privately owned milk processing company, United Dairy Power (UDP), says he plans on using his newly acquired asset as a stepping-stone for breaking into the gigantic milk market in China.
Mr Hui, who is also the chairman of Singapore-based Swing Media Technology, last month paid around $70 million to take control of UDP from its founder Tony Esposito. He says he is planning to invest additional $20 million to further bolster capacity at the group’s factories or seek alliances to help UDP enter the milk powder business.
According to the article on The Australian, Mr Hui is considering to purchase farming properties in the future as part of his expansion plans for UDP, designed to capitalize on the growing demand for powdered milk products in China.
However, Mr Hui said the company remained committed to maintaining capacity in the local market and would only proceed with its expansion plans if it could source bigger milk supplies.
“We now still mainly rely on the local market. If we get more milk supply then we will divert to the China market,” he said in an interview for The Australian.
“Our factories have the potential to produce more but supply is at the maximum already. We need to look for the milk supply, increase our production and then we can go to China.”
Mr Hui further added that there were other investors in China willing to follow his lead to purchase or invest in Australian dairy assets.
“We all know there are lots of investors in China. In the coming five years there will be a lot of Chinese coming to this market. In the past five years it has been in mining, but in the coming five years it will be in dairy,” he said.
“Whether it is a big company or a medium-sized company in China, they will be interested because the dairy product from Australia is very good. The environment here is very good for the cows and the milk. China has already been importing a lot of cows from Australia.”
Mr Hui’s chief financial adviser and Chinarise CFO, Johnny Chan, said the company was in dialogue with Austrade about providing more support to the local farmers to help them bolster supply.
“I think the government should give more support to the farmers, to help them to grow. They shouldn’t just rely on the foreign investor financing the farmers.”
Mr Hui said they were pleased with local profitability and were not looking to cut off production or capacity for the local market.
“We don’t want to cut that off and ship to a new market.”
Tighter food safety rules in China have also made it more difficult for importers of dairy products, especially after a contamination scandal involving New Zealand dairy giant Fonterra last year.
“We need to be very careful because of new regulations governing the import of dairy products into China. Other people have been getting into big problems. We don’t want to jeopardise everything we have established,” said Mr Hui.