Chinese company to build $210m NZ milk processing plant

Yashili International Holdings, which manufactures and distributes infant milk formula products in China, is the latest Chinese company looking to invest in New Zealand, with plans to build a 1.1 billion yuan ($210 million) processing plant.

The Chaozhou City, Guangdong-based company's board signed off on a project to set up a manufacturing facility in New Zealand to process up to 52,000 tons of finished and semi-finished products, including base milk powder, by the second half of next year, according to a statement on the Hong Kong Stock Exchange.

Yashili currently sources most of its raw milk from New Zealand.

The company will spend 950 million yuan on acquiring land and building the plant, and a further 150 million yuan as working capital for a New Zealand subsidiary.

The local unit, Yashili New Zealand Dairy Co, was incorporated in July last year, Companies Office records show, and has entered into a conditional agreement to buy land where the facility will operate.

The acquisition is subject to certain conditions, including approval by the Overseas Investment Office.

The investment comes a month after China's Inner Mongolia Yili Industrial Group flagged plans to spend some $214 million buying and upgrading Oceania Dairy Group's South Canterbury milk powder plant.

Chinese investment in New Zealand has been a heated topic in recent years after bids to buy large tracts of farmland forced the government to announce a U-turn on its plans to free up overseas investment and a High Court ruling made the OIO impose a more rigorous analysis of foreign purchases.

Yashili was set up by brothers Zhang Lidian and Zhang Likun in 1998 and is ultimately controlled by the Zhang family.

US private equity firm Carlyle Group bought a stake in the company in 2009 to ramp up its research and production, and raised $HK2.7 billion when it floated a minority share in Hong Kong the following year.

The shares gained 0.4 percent to HK$2.38 in trading yesterday, and have almost doubled in the past 12 months.

Chairman Zhang Lidian is on the Chinese committee of the International Dairy Federation, and serves as a representative for the Guangdong province in the National People's Congress, according to Yashili's website.

(BusinessDesk)

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Good news. Now I'll wait for the usual nonsense from the anti brigade.

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As this investment involves adding new productive capacity to New Zealand Inc rather than just taking control of what is already here, I don't think this will excite much anti, as you put it, interest at all.

New Zealanders are right to be concerned about placing large tracts of their finite farmland and productive industries under foreign ownership and control. It's disappointing (and probably self-serving of you) that you dismiss those legitimate concerns as nonsense. Have you learnt nothing from history??

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No.

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My concern is the hysteria surrounding any Chinese activity in NZ. Nothing is said when Scandinavians, Americans, Australians and other nationalities buy farms, forestry, etc.

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You are concerned over the "hysteria surrounding any Chinese activity". Well, after half a lifetime trading with them both here and in mainland China I can only ask you the question: why are you not surprised?

Unlike all the other nationalities mentioned, as a national, military, political collective they cannot be trusted.

Even my many Far East friends continuously caution me and help where possible. I prefer not to trade with military despots and slavers.

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The Scandinavians, Americans, Australians and other nationalities do not lock up their own people for speaking out against their government, nor do Tibetan monks set themselves on fire in protest at the way they are treated by the Chinese. Many websites are blocked in China and so if they get their hold on NZ, it won't be long before the original people who live here are a minority, then they will get a political party here, etc. Why are people naive to think this will not happen here?

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Right. Like they are going to take this valuable investment, package it up and take it back to China? It isn't going anywhere as far as I can see...

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And what have you New Zealanders learnt from history?

Have you learnt :

1. To live within your means and stop borrowing?

2. To invest in productive assets rather than in finance companies and coastal properties?

3. To stop social welfare cheats and curb baby production as a lifestyle choice?

Why did no New Zealanders put up their hands to invest in Synlait when the company was put up for sale?

One word - losers. That's what most New Zealanders are.

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With name like Dragon I presume which continent you are from. If we are such losers why are you living in our country?

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Losers are there to be taken advantage of.

Get it?

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While it is clear to see the short-term benefits of this overseas investment, like more local employment, once the company ties up some farmland to supply their factory, company profits will be channelled through tax havens. Long term, this will come at a big cost to NZ Inc.

Fonterra's business model is starting to look sick with this. Had the local dairy companies remained, they would not have let a local business opportunity like this slip into someone else's hands. More NZ Inc profits look likely to be exported.

It's time business managers started to think long term, rather than fatten their short bonuses, and disappear elsewhere.

Tenants in our own country, here we come.

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What a load of sensationalist nonsene! "Tenants in our own country." Meantime, Fonterra is obligated by law to supply milk to NZ consumers at extremely low margins rather than export it as product and make significantly greater returns for the NZ owners and investors. Your rhetoric would indicate the logic is that China shouldn't allow us to operate business interests over there. Like we should all operate as islands on this planet. Doesn't make any sense to me...

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"Meantime, Fonterra is obligated by law to supply milk to NZ consumers at extremely low margins . . . "

Really? Who knew?

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Everbody who bothered to establish the facts - that's who.

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If you are a tenant does it really matter if the landlord is in Beijing, Sydney or Auckland?

What is important is that someone wants to invest in assets in this country. High wage rates require a large investment in capital to make labour more productive. Since New Zealanders prefer consumption over investment the only way to maintain high wages is to allow foreigners to do the investing and to own the assets.

These investment opportunities only exist because Kiwis are not willing to take them up themselves.

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It matters that you are owner/occupiers because investors are purely driven by return, and bugger the social consequences of their actions.

The US corporations are an example of maximising returns, while the balance of its society deals with high unemployment, the worst violent statistics in first world society, a health system only for the privileged, and periodic mass shootings.

These are all byproducts of corporate greed and tax avoidance by the overpaid elite. How can a corporation pay one employee $10,000,000 plus, yet another $30,000? Time to cap salaries, or tax them at 90% or pay people at the bottom more.

What this and NZ governments need to do is encourage NZ Inc to invest locally. The biggest problem NZ Inc has got is over investment from outsides, when allowing for the present government borrowings and expatriated profit is currently creating an annum deficit in the region of $30 billion.

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OK, so you're missing the point.

I didn't discuss owner/occupiers, not that it matters.
Investment is investment, doesn't matter who does it. Pay rates are at the discretion of private companies. It is up to the shareholders if they are comfortable with paying one man $10m, as it is them who are paying, not you.

Maximising returns is actually a good thing. You fail to understand what money and prices really are - they are signals that keep things near equilibrium. Maximisation of returns is merely responding to the preferences of the people participating in the economy.

Expatriation of profits is only a monetary transaction, the result of which is a lowering of the exchange rate. Eventually, a balance will be found, as foreigners who invest in a country with future deficits will see (and forecast) a devaluation of their investment in terms of their home currency.

My comment did implicitly recommend encouraging Kiwis to invest. But over-investment from outsiders is not a problem, it is a response to the under-investment of NZers - a response that is protecting our economy and standard of living.

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They are taking parts of the nation, not investing in assets.
The corporations are the only ones that have the financial ability to exploit the cr*p out of the tax base and take the nation and its high-value assets offshore.

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No. The new infrastructure investment discussed in this article is not "taking" anything.

Apart from this, foreigners are purchasing from willing sellers who can choose to do other things with their freed-up capital. New Zealand assets are so high valued because of the lack of interest in ownership of them by citizens.

Corporations are merely entities, they don't have any special powers. They don't have financial ability, their shareholders do. And who are the biggest shareholders? In most cases, it is pension funds and people who are willing put aside their income to invest in the future.

The tax base is only as large as it is because of the large investment in capital that there is in this economy.

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Yes, it is taking a part of the nation. Look up the definitions of our nation.
The milk, the nation, really are things.
Most New Zealanders are not in the same situation as the multinationals. They are unable to use pension funds and create money from nowhere, and they also have to pay taxes and work. They don't just skive around buying up other nations.

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Where will the plant be built and farmland bought?

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Somewhere near cows.

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When is all this selling NZ to overseas companys going to END> Any NZ goverment is in it themselves, What's going to go next ?

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It will end as soon as ACC, the Superannuation Fund, EQC, all the private Kiwisaver funds, other retirement funds,open-ended general investment funds, share investors, etc, cease the evil and immoral practise of buying shares, equities, businesses and properties, both rural and commercial, all over the world.

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Yes, well, of course if the electorates hadn't voted for so many election bribes and lifestyle handouts during the past 60 years, we, as NZ, would have the investment capital to build and operate large manufacturing industries.
Listen carefully to the prattling of Shearer and company. There are more bribes coming. 'Housing', and more disincentives towards the motivated, all supported by the 'don't build or develop anything anywhere' brigade, and the whole lot capped off with 'price controls', and a capital gains tax to support the unmotivated who vote for these bribes.
TV1 is already electioneering on behalf of the socialists, and this is only 2013, 20 months before the election.
You have been warned.

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Well put!

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If people are worried about this, raise capital and build a plant yourselves, export the milk powder, keep the profits and retire rich. Easy as...

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Where is the milk going to come from?

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I don't think there is any hysteria. It is unfair, especially when China has the money to buy processed infant milk off NZ .
It is exploitation as the benefits only go one way.

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How is it that the benefits only go one way? Will they be stealing the milk and bringing their own building materials and labour?

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Yes, maybe they are stealing prime national assets. Our cows and milk products that will be used for infant formula that they were buying from us. Will they be bringing the NZ land, kiwi know-how on farming and cows? Will they be using cheap Filipine labour the same as dairy?
You get a reality check, buddy.
It's great if we want to lower or exports and overall "wealth". Are they the benefits you mean?
No one wants to pick on a big corporation that is buying up the fastest-gaining in value assets of a smaller country to the economic detriment of its people.
Why don't you enrich them further, surfguy, by buying their stock, inflate the cr*p out of it , yeah that makes it fair - if you get into the feed trough.
You can't be turning this one-sided land and nation equation into "communism". It's unfair, full stop.

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Further to my comment above, go buy some shares of the company, as they are listed in HK.

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No imputation credits available to NZ shareholders. Double taxation is hardly an incentive to invest offshore, yet our Government lets offshore shareholders benefit from our liberal taxation system.

Time to level the playing field government, and work for this country rather than pamper to the offshore elite.

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Meat Industry ala 1980s - too much capacity being added...

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Just outside Kaikohe is my guess...

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Good call, Buster.
This is just the sort of economically deprived, and educationally illiterate, area that communists favour for their infiltration indoctrination. Then they can watch the seeds spread. It is the technique they have used worldwide. Look at central Africa.

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Well, someone’s buying up land in Kaikohe... Probably them.

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I would have said Kaikohe has large areas of under-used quality land and large number of under-used people. Good on the Chinese for spotting it.

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When you consider net 45,000 Kiwis leave New Zealand each year and are replaced by foreigners, and that New Zealand is virtually insolvent and therefore selling its state owned assets to foreign companies and encouraging foreign investment like this Chinese developent, New Zealand will look and feel a very different country in 10 years. Some good, some bad in there, but those are the facts.

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First they came for the communists,
and I didn't speak out because I wasn't a communist.

Then they came for the socialists,
and I didn't speak out because I wasn't a socialist.

Then they came for the trade unionists,
and I didn't speak out because I wasn't a trade unionist.

Then they came for me,
and there was no one left to speak for me.

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Better start polishing up on your Mandarin.

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First we borrowed,

Then we borrowed some more,

Then we kept borrowing.

Then we had to sell assets because we had borrowed too much and lived well beyond our means for too many decades.

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We did not need to borrow as we could have created the money ourselves.
"We" don't have to sell our assets. "We, the people," can just tell the central bank cartel NOPE. It's not our debt.

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Argentina, Greece and Spain - here comes NZ to join the club of the debt defaulters.

Rejoice that there are such profound losers in NZ.

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Dragon, it wasn't our debt to start with.
It's not defaulting any more than if you were refusing to pay for pies that Margaret Thatcher had stolen and eaten without your consent, (she had used your identity and told the banks to bill you with pie interest).
That you would work you whole life in slavery unconsciously adopting the ideals of the corporation like a mindless drone.
Wake up.

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Scandinavians, Americans and Australians don't bribe immigration agents to get visas to displace Kiwi workers. Scandanavians, Americans and Australians don't come from racist states that refuse to allow Kiwis to own land in their countries.

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I once heard that Australia was going to be the New China. Maybe NZ is going to be Little China. Who knows?

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Labourers to the Chinese if we are lucky. We give them our secrets cheaply, they buy our land and force up prices and import their families and don't pay tax on their cash businesses. The only good is they keep the jobs going in the casino.

John Key, wake up and restrict foreigners from buying our land and having a free open door.

I'm sure he has made several Auckland purchases after his new policies to flood the counrty with immigrants.

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You should immediately inform the IRD of those who are not paying tax. They'd love to know. Also I'm sure this newspaper, and its readers, would be interested in publishing the addresses of these properties the PM has bought. As far as these secrets go, I'm not sure what 'our secrets' are, or rather were, before they stopped being secret. But, obviously, we can't give them 'cheaply'. If they are cheap we must be getting paid. So what are they - and how much underpriced are they?

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