Wahaha looks overseas to fill demand for milk powder supplies

Hangzhou Wahaha, the mainland's leading beverage producer, is seeking to invest in dairy farms and milk powder factories overseas to secure raw material supply, amid continuing concern over food safety.

"Our biggest problem is milk powder," said Wahaha's chairman, Zong Qinghou, revealing that the company needed a huge amount of milk powder - 150,000 tonnes - every year.

"We are looking at investing in dairy farms and milk powder factories in Australia," Zong said.

However, the lengthy approval procedures made investing in the country difficult, he said.

Zong said Wahaha had not set a budget for overseas investment in Australia. "Money is not a problem, we have money," he said, adding that the investment would depend on what opportunities were available, and government approval.

Wahaha's sales target this year is 80 billion yuan (HK$99.7 billion).

New Zealand is another major dairy product exporter, Zong said, but the approval procedures for a mainland investor would be even more complicated.

Tackling food safety problem on the mainland should start with agricultural sources, but there were too many small farms, which made regulation difficult. "The food safety problem is unlikely to be solved shortly," Zong said.

Wahaha is also seeking to invest in dairy farms on the mainland. But Zong said: "Land resources are rare in China, while Australia is rich in resources."

Zong was named by Forbes magazine last year as the richest man on the mainland with a fortune of US$10 billion. "My company is quite transparent, my wealth is disclosed," he said. "I think I should be a rich man, but this also reveals my own value." He said he did not feel that the income gap problem on the mainland had driven up the hatred of the rich. "I live as simple a life as other people," he said.

To solve the wealth gap problem, Zong said, enterprises should take a responsibility to help the public build their wealth.