Research Background
There are significant changes in global dairy market in 2008. Due to rising cost and tight supply global dairy price hit a new high in 2007, which greatly influenced dairy policies in many countries, so supply and demand relationship got dramatically changes among those countries, including enhancing domestic production, reducing exports, stimulating dairy supply. In addition, the economic depression has spread around the world, causing decreasing resident income and consumption as well as demand for dairy products. Raw milk and dairy product prices are continuously dropping, including skim and whole milk powder, whey and cheese.

In 2008 china dairy industry should be separated two stages by Melamine Scandal. Before that it still grows at a fast rate and State Stat. Dept. shows that in the first eight months of this year, the yield of liquid and solid milk products are 10,178kt and 2,495kt, up by 12.07% and 7.34% than the same period of last year respectively; after the scandal in both Sept and October they dropped by 18.7%, 32.5% and 15.58%, 32.39% respectively. Resident demand for dairy products is seriously affected and the production of Yili and Mengniu dropped with 90%. Sanlu group is even closed and sold for auction. The whole dairy chain is making great losses after Melamine Scandal and dairy export is also facing unprecedented crisis.

In order to regulate china dairy market, in the first half year of 2008 the Government issued Requirements on Dairy Processing Permits and Dairy Industry Policies in March and May. After the Melamine Scandal, the Government issued Notification on Enhancing and Supervising Dairy Quility Regulation and Proposals on Dairy Industry Resumption in October and November and Food Safety Act will be implemented soon to revise emerged problems related to the scandal. All these show that the Government is enhancing laws and regulations in dairy industry and dairy consumers are paying more attention on quality. Domestic dairy producers are changing strategy to reply new macro-environment. It is a good chance for international dairy enterprises to invest in China.

This report analyzes dairy production, consumption, market price, basic situation of import and export, market competition, relevant hot topics, policy direction and impact, development of main dairy processing and packaging enterprises in China and the development of the international dairy industry in 2007, there is also a forecast for the development trend of the Chinese dairy industry in 2008. This report gives an integrated analysis on the effects of Melamine Scandal.

This report is a joint product of the experts of the Dairy Department, Beijing Orient Agribusiness Consultants Ltd.. These senior dairy analysts also make advice for relevant departments and associations, and keep a beneficial relationship with major dairy enterprises, relevant industry enterprises, which provide precious information and data for this report, assuring the veracity, authority and forward looking. This is a rare report which shall be of great value for dairy investment companies, producers, material suppliers, equipment suppliers and research institutes both at home and abroad to understand the development trend of the dairy industry, to make decisions on the positioning of the enterprise and to formulate development strategies.

CHAPTER ONE OVERALL DEVELOPMENT OF DAIRY INDUSTRY IN CHINA IN 2008
1.1 Raw Milk Production
1.1.1 Slowing Down of Growth of Dairy Cattle Inventory, Lowest Level since 2000
1.1.2 Negative Growth of Production of All Sorts of Milk and Cow Milk since 2000
1.2 Dairy Processing
1.2.1 Growth of Liquid Milk Production, Lowest Level since 2000
1.2.2 Slowing Down of Output of Solid Dairy Products
1.3 Dairy Products Trade
1.3.1 Renewed Growth of Dairy Import
1.3.2 Large Slide of Export of Dairy Products
1.4 Dairy Products Consumption
1.4.1 First Slide of Per Capita Possession Volume of Milk
1.4.2 Large Slide of Dairy Consumption by Urban Residents
1.5 Dairy Product Prices
1.6 Dairy Industry Developments
1.7 Restructuring of Dairy Industry
1.8 Policy on Dairy Industry

CHAPTER TWO POLICY ENVIRONMENT OF DAIRY INDUSTRY IN CHINA, 2008
2.1 Overall Situation of Relevant Policies
2.2 Notification on Enhancing and Supervising Raw Milk Makret Regulation
2.2.1 Background
2.2.2 Major Contents
2.2.3 Effects on the Market
2.3 Requirements on Dairy Processing Permits
2.3.1 Background
2.3.2 Major Contents
2.3.3 Impacts on China Dairy Industry Development
2.4 Dairy Industry Policies
2.4.1 Background
2.4.2 Major Contents
2.4.3 Impacts on Domestic Dairy Industry
2.5 Food Safty Act. And its Revisement
2.5.1 Background
2.5.2 Major Contents
2.5.3 Impacts on Domestic Dairy Industry

CHAPTER THREE EFFECTS OF MELAMINE SCANDAL ON DOMESTIC DAIRY MARKET
3.1 Overview of Melamine Scandal
3.2 Effects on Raw Milk Production
3.3 Effects on Dairy Processing
3.4 Effects on Dairy Consumption
3.5 Effects on Dairy Trade
3.6 Effects on Industry Competition
3.7 Effects on Industry Profit
3.8 Effects on Industry Policies

CHAPTER FOUR ANALYSIS OF DAIRY PRODUCTION IN CHINA IN 2008
4.1 Raw Milk Production
4.1.1 General Situation
4.1.2 Dairy Cattle Inventory
4.1.3 Milk Output
4.1.4 Regional Layout of Raw Milk Production
4.1.5 Raw Milk Procurement Prices
4.2 Dairy Processing
4.2.1 Liquid Milk
4.2.1.1 UHT Milkt
4.2.1.2 Pasteurized Milk
4.2.1.3Yogurt
4.2.2 Solid Dairy Products
4.2.2.1Fomular Milk Powder
4.2.2.2 Packged Milk Powder
4.2.2.2 Other Products

CHAPTER FIVE CHINA DAIRY PRODUCTS TRADE ANALYSIS IN 2008
5.1 Analysis of Dairy Product Imports
5.1.1 General Situation
5.1.2 Import Structure
5.1.3 Analysis of Milk Powder Imports
5.1.3.1 Import Volume
5.1.3.2 Import Structure
5.1.3.3 Source of Import
5.1.3.4 Import Destinations
5.1.3.5 Import Prices
5.1.4 Analysis of Whey Products Import
5.1.4.1Import Volume
5.1.4.2Source of Import
5.1.4.3 Import Destinations
5.1.4.4 Import Prices
5.1.5 Analysis of Fats & Oils Milk Import
5.1.5.1 Import Volume
5.1.5.2 Source of Import
5.1.5.3 Import Prices
5.1.6 Analysis of Cheese Imports
5.1.6.1 Import Volume
5.1.6.2 Import Source
5.1.6.3 Import Prices
5.1.7Analysis of Fresh Milk & Cream Import
5.1.7.1 Import Volume
5.1.7.2 Source of Import
5.1.7.3 Import Prices
5.1.8 Analysis of Yogurt Imports
5.1.8.1 Import Volume
5.1.8.2 Source of Import
5.1.8.3 Import Prices
5.2 Analysis of Dairy Product Exports
5.2.1General Export Status
5.2.2 Analysis of Fresh Milk & Cream Export
5.2.2.1 Export Volume
5.2.2.2 Source of Export
5.2.2.3 Export Prices
5.2.3 Analysis of Milk Powder Export
5.2.3.1 Export Volume
5.2.3.2 Source of Export
5.2.3.3 Export Prices

CHAPTER SIX ANALYSIS OF DAIRY CONSUMPTION IN CHINA IN 2008
6.1 Overall Situation of Dairy Consumption
6.2 Structure of Dairy Consumption of Urban Residents
6.3 Regional Analysis of Dairy Consumption of Urban Residents
6.4 Retail Prices of Dairy Products
6.4.1 Fresh Milk Prices
6.4.2 Yogurt Prices
6.4.3 Milk Powder Prices
6.5 Packged Milk Powder Prices
6.6 Feed Prices

CHAPTER SEVEN CHINA DAIRY MARKET COMPETITON ANALYSIS 2008
7.1 Features of Dairy Market Competition
7.2 Competition of Raw Milk Market
7.3 Competition of Milk Powder Market
7.3.1 Environment of Milk Powder Market
7.3.2 Market Share of Main Competitive Brands
7.4 Competition of UHT Milk Market
7.5 Market Competition of Pasteurized Milk
7.6 Market Competition of Yogurt

CHAPTER EIGHT CHINA LEADING DAIRY ENTERPRISES ANALYSIS 2008
8.1 Yili Group
8.1.1 Business Revenue
8.1.2 Status in Market Competition
8.1.3 Effects of Olympic Games and Melamine Scandal
8.1.3.1 Effects on Fundamentals
8.1.3.2 Effects on Stock
8.1.4 Business Forecast of Yili Group
8.2 Mengniu Group
8.2.1 Business Revenue
8.2.2 Status in Market Competition
8.2.3 Effects of Melamine Scandal
8.2.3.1 Effects on Fundamentals
8.2.3.2 Effects on Stock
8.2.4 Business Forecast of Mengniu Group
8.3 Bright Dairy
8.3.1 Business Revenue
8.3.2 Status in Market Competition
8.3.3 Effects of Melamine Scandal
8.3.3.1 Effects on Fundamentals
8.3.3.2 Effects on Stock
8.3.4Business Forecast of Bright Dairy
8.4 Sanlu Group
8.4.1 Effects of Melamine Scandal
8.4.2 Mergers and Acquisitions
8.4.3 Business Forecast of Sanlu Group
8.5 Sanyuan Foods
8.5.1 Business Revenue
8.5.2 Status in Market Competition
8.5.3 Opportunity after Melamine Scandal
8.5.4 Business Forecast of Sanyuan Foods
8.6 Wandersun Dairy
8.6.1 Business Revenue
8.6.2 Status in Market Competition
8.6.3 Opportunity after Melamine Scandal
8.6.4 Business Forecast of Wandersun Dairy
8.7 Yinqiao Dairy
8.7.1 Business Revenue
8.7.2 Status in Market Competition
8.7.3 Effects of Melamine Scandal
8.7.4 Business Forecast of Yinqiao Dairy
8.8 New Hope Dairy
8.8.1 Business Revenue
8.8.2 Status in Market Competition
8.8.3 Effects of Melamine Scandal
8.8.4 Business Forecast of New Hope Dairy
8.9 Nestle
8.9.1 Business Revenue
8.9.2 Effects of Melamine Scandal
8.9.3 Business Forecast of Nestle Dairy
8.10 Dumex
8.10.1 Business Revenue of Dumex
8.10.2 Status in Market Competition
8.10.3 Business Forecast of Dumex

CHAPTER NINE CHINA PACKAGE ENTERPRISES ANALYSIS FOR DAIRY PRODUCTS 2008
9.1 Analysis of Tetra Pak’s Main Business in China
9.2 Effects of Melamine Scandal on Tetra Pak
9.3 Forecast of Tetra Pak’s Business in China in 2009

CHAPTER TEN CHINA DAIRY INDUSTRY DEVELOPMENT ANALYSIS IN 2008
10.1 Overall Situation of Dairy Industry
10.2 Analysis of Running Ability of China Dairy Industry

CHAPTER ELEVEN ANALYSIS OF THE WORLD DAIRY MARKET IN 2008
11.1 Analysis of the Overall Situation of the World Dairy Market in 2008
11.1.1 Overall Situation of the World Dairy Market in 2008
11.1.2 Analysis of Factors Influencing on World Dairy Products Market Trend in 2008
11.2 Analysis of Dairy Market Situations of Leading Production & Trade Countries (or Regions) in the World in 2008
11.2.1 New Zealand
11.2.2 Australia
11.2.3 United States
11.2.4 EU-27
11.2.5 India
11.3 Analysis of Economic Crisis on Global Dairy Market

CHAPTER ELEVEN PREDICTIONS FOR CHINA'S DAIRY INDUSTRY IN 2009
12.1 Prospect of Raw Milk Production
12.1.1 Changes of Production Model
12.1.2Cow Inventory
12.1.3Raw Milk Output
12.1.4Raw Milk Production Regional Layouts
12.2 Prospect of Dairy Product Process
12.2.1 Liquid Milk
12.2.1.1UHT Milk
12.2.1.2 Pasteurized Milk
12.2.1.3 Yogurt
12.2.1.4 Lactic Drinks
12.2.2 Condensed Milk
12.2.2.1 Milk Powder
12.2.2.2 Other Condensed Milk

12.3 Prospect of Dairy Product Trade
12.3.1 Import Trade
12.3.2 Export Trade
12.4 Prospect of Prices of Raw Milk and Dairy Products
12.4.1 Raw Milk Prices
12.4.2 Dairy Product Prices
12.5 Prospect of Dairy Product Consumption
12.6 Prospect of Dairy Industrial Competition0
ANNEX
Annex One: China Raw Milk Balance Sheet, 2007-2009
Annex Two: China WMP Balance Sheet, 2007-2009

Figures & Tables
Figure 1-1 Cow Inventory Growth Trend in China, 1998-2008
Figure 1-2 Raw Milk Output Growth Trend in China, 1998-2008
Figure 1-3 Liquid Milk Output Trend in China, 2000-2008
Figure 1-4 Solid Milk Products Output Trend in China, 2000-2008
Figure 1-5 Dairy Products Import Trend in China, by Month, 2004-2008
Table 1-1 Dairy Products Imports in China, 2008
Table 1-2 Dairy Products Exports from China, 2008
Figure 1-6 Growing Trend of Per Capita Milk Possession Volume in China, 1992-2008
Figure 1-7 Percapita Consumption of Dairy Products in Urban Regions of China?1992-2008
Table 1-3 Average Retail Price of Dairy Products at Urban Market in China, by Quarter, 2005-2008
Table 1-4 Growth of Average Retail Price of Dairy Products at Urban Market in China, by Quarter, 2005-2008
Table 1-5 Indices of Dairy Industry in China, 2002-2008
Figure 3-1 China Cow Inventory Growth Trend, 1998-2008
Figure 3-2 Growing Trend of Output of All Sorts of Milk in China, 1998-2008
Table 3-1 Dairy Cattle Inventory, Cow Milk Production and Growth, 1998-2008
Figure 3-3 Changes of Dairy Cattle Inventory of Different Provinces and Regions in China, 2008
Figure 3-4 Status of Provincial Dairy Cattle Inventory in China, 2008
Figure 3-5 Changes of Provincial Cow Milk Output, 2008
Figure 3-6 Status of Provincial Cow Milk Output in China, 2008
Figure 3-7 Change of Raw Milk Procurement Prices in Different Regions of China, 2005-2008
Figure 3-8 Liquid Milk Production and Growth in China, 2001-2008
Figure 3-9 Liquid Milk Production and Proportion in Total of Dairy Products in China, 1996-2008
Figure 3-10 Liquid Milk Production of Various Regions in China (I), 2000-2008
Figure 3-11 Liquid Milk Production of Various Regions in China (II), 2000-2008
Figure 3-12 Liquid Milk Output of Top 5 Provinces in China, 2000-2008
Figure 3-13 Liquid Milk Structure in China, by Volume, 2000-2008
Figure 3-14 UHT Milk Output & Its Growth Rate in China, 2001-2008
Figure 3-15 Pasteurized Milk Output & Its Growth Rate in China, 2001-2008
Figure 3-16 Yogurt Output & Its Growth Rate in China, 2001-2008
Figure 3-17 Solid Dairy Products Output & Its Proportion in Total Dairy Products in China, 1998-2008
Figure 3-18 Solid Dairy Products Output & Its Growth Trend in China, 1998-2008
Figure 3-19 Solid Dairy Products Output in Different Regions in China, 1998-2008