The signing of an agreement between Shanghai Pengxin Group, China Mengniu Dairy Company Ltd, and New Zealand Maori dairy company Miraka opens a new chapter of Pengxin's story in New Zealand.

Starting with the Crafar Farm acquisition in late 2012, Pengxin then acquired the Synlait Farm in South Island in April, becoming the third-largest dairy farmer in New Zealand. The company boasts of more than 12,000 hectares of pasture producing over 10 million kilograms of milk solids a year. Another 14,000 hectares is expected to join its portfolio upon the New Zealand Overseas Investment Office rules on its application to buy Lochinver Station.

But land is far from the main point of the company's story.

"New Zealand Dairy Supplying China," the slogan used at Pengxin's booth at an agricultural technology show, describes Pengxin's dream: Miraka collects milk from Pengxin farms to make ultra high temperature treated milk for Pengxin under its Theland brand, with the whole chain traceability supported by Assure Quality.

Chinese consumers can order Theland UHT milk through WeChat to have the products freshly delivered from New Zealand. The quick response code on the packaging reveals the details of the milk's production from farm to glass, and it's easy and convenient for consumers to order and pay online if scanned.

Plenty of land, green grass feed all year and pure water have made New Zealand's farms a paradise for dairy cows. They produce some of the best milk in the world: high in protein, with a low bacteria count, more nutritious. These factors are much sought-after by China's growing middle class.

Also, Globe Selection of Milk Deluxe, a popular Chinese milk brand owned by Mengniu, is now sourced and processed in New Zealand. This demonstrates the close cooperation among Pengxin, Mengniu and Miraka to provide Chinese consumers with the best quality dairy products delivered by Chinese companies.

As a pioneer in building an overseas dairy value chain, Pengxin is still learning. Cooperation with upstream partners in New Zealand like Landcorp and Miraka, and with downstream partners in China like Mengniu, is very important to Pengxin. In this world of collaboration, dairy is a long-term investment, and you can't go far by yourself, said Pengxin Chairman Zhaobai Jiang. "We are determined to make a difference, and we are prepared for any challenge."

Pengxin plans to gather its dairy assets and operations in New Zealand under Dakang Pasture Farming, one of its listed companies in the Chinese mainland. The business will be managed by professional international teams, including Deyu Zhu, former CEO of infant formula manufacturer Beingmate, and Gary Romano, former managing director of New Zealand dairy firm Fonterra.

Sales of imported baby formula have gained big momentum in China since the melamine adulteration incident in 2008, growing at a speed of nearly 100 percent each year. A shortage of suitable land, air and water pollution, and soaring demand for high quality dairy products all have made it very hard for China to satisfy the needs of its huge population of 1.3 billion people.

This challenging task has meant a great opportunity for companies like Pengxin that aspire to meet the nation's needs. As its motto says, we look forward to Pengxin beyond expectations.

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(China Daily 11/21/2014 page7)