China has firmed up details of how it plans to subsidise mergers and acquisitions in the domestic infant milk powder market.

Beijing’s ministry of industry and information technology has identified six “national champion” companies – China Mengniu Dairy Co., Feihe International, Heilongjiang Wondersun Dairy, Inner Mongolia Yili Industrial Group, Treasure of Plateau Yak Dairy Co. and Wissun International Group – to spearhead the consolidation drive.

“These companies have the required production technology, management and safety standards, and traceability systems,” said ministry spokesman Zhu Hongren. Mengniu and Yili are the largest domestic players in the market.

Subsidies, loans and tax breaks will be available for firms wanting to close or merge with these major players, reducing China’s 127 domestic infant formula companies by 60% by the end of 2018. They will also fund product launches.

Reports say the restructuring plan will be funded by government to the tune of CNY30bn (US$5.9bn) but no official figure has yet been confirmed.