The unveiling ceremony of the Oceania Production Base is held in  Waimate, New Zealand, on Nov 21. [Photo/Yili Group]

Inner Mongolia Yili Industrial Group Co Ltd, the Chinese dairy giant, has made steady progress in its global layout in the Southern Hemisphere.

The group unveiled its Oceania Production Base in New Zealand on Nov 21. It was the first Sino-New Zealand cooperative project.

The project, located in Waimate, a city that produces 42 percent of New Zealand's raw milk, covers a range of fields, from packaging, production and processing to research and development (R&D), making it the largest integrated dairy base in the world.

Yili has input more than 3.2 billion yuan ($470 million) on the project, including previous investment of 1.2 billion yuan and new investment of 2 billion yuan.

According to the group, the new 2-billion-yuan fund will be invested in construction of the base's four projects, covering raw milk deep-processing, UHT (ultra-high temperature processing) liquid milk, milk powder production and packaging. The raw milk deep-processing project and the UHT liquid milk project, with investments of 200 million yuan and nearly 500 million yuan, will become the largest and technically best of its kind in New Zealand. The milk powder manufacturing and packaging projects will require the largest investment, at nearly 1.3 billion yuan.

In two years, Yili has invested 2.5 billion yuan in the milk powder industry in New Zealand, signifying the importance of the country and even the wider Oceania region in Yili's global strategy.

Song Liang, a dairy industry expert, said that New Zealand is a country with abundant dairy resources and is also the first developed country to sign a free trade agreement (FTA) with China. Chinese dairy producers have significant development potential. "New Zealand enjoys dairy cost and resource advantages. Enhancing Sino-New Zealand cooperation is one of the necessary ways for Chinese and New Zealand companies to seek mutual growth," Song said.

On the same day, Yili Group and Lincoln University signed an agreement on comprehensive dairy industry chain research. According to the agreement, the two sides will carry out in-depth cooperation based on their unique resources and technological advantages, focusing on the strategy of a whole dairy industry chain. The two parties will research and develop innovative technologies to improve dairy product nutrition and quality in the first few years.

Lincoln University is the only university in the Southern Hemisphere to specialize in agriculture and food sciences and is a world-class research institution. The agreement will be a highlight of the collaboration between Yili and New Zealand, and will mark the upgrading of Yili's integrated dairy base.

This year, Yili has stepped up its efforts in innovation. The cooperation with New Zealand was part of the group's moves to establish R&D centers in Europe, utilizing advanced experience and technological resources of dairy regions to better satisfy the needs of Chinese consumers. It aimed to help more consumers enjoy nutritional products developed by international experts.

"China and New Zealand have their own advantages in the dairy industry. Yili has striven to lead demand by innovation and stimulate innovation by demand," said Pan Gang, president of Yili Group. Pan explained that the frequent interaction between China's dairy players and their New Zealand counterparts was beneficial for a better industrial alliance in the short term. However, Yili's ultimate target was to bring the best quality products to consumers.

Andrew West, president of Lincoln University, said, “We appreciate Yili's emphasis on innovation of global cooperation and feel happy about this in-depth collaboration.” He also expressed confidence that the cooperation would help promote the upgrade of the whole industrial chain.

Yili has set new records in the history of Sino-New Zealand economic and trade cooperation, highlighting the largest project value and engagement in diplomatic activities. Apart from the base inauguration and agreement signing, Yili was also invited to the China-New Zealand agriculture exhibition and welcome luncheon.

In April 2013, Yili Group invested its first fund of 1.1 billion yuan in the first phase of its Oceania production base, which will go into production soon with an expected annual output of 47,000 tons of infant formula. The group later added investments of 115 million yuan and 2 billion yuan, bringing the total investment to over 3 billion yuan. Yili is now has the largest Chinese investor with the widest cooperation in New Zealand.