Fonterra heading for financial disaster in China: expert

Fonterra is heading for a bigger financial disaster over its shaky investment in Chinese company Beingmate, says Chinese dairy expert Jane Li.

She told Rural News that Beingmate has lost its top spot in the Chinese infant formula market and the company is in turmoil.

Li says she warned Fonterra’s top brass, including chairman John Wilson, 18 months ago about Beingmate’s “internal power struggle” and its problems in selling Fonterra’s Anmum brand infant formula. Beingmate’s share price dropped to 5.31 RMB (NZ$1.14) (FJ$1.68); Fonterra paid 18 RMB/share (NZ$3.88) (FJ$ 5.71 ) for its 18.8 per cent in 2015. Li and her Kiwi partner Simon Page are the brains behind the successful NZ Milk Bar corporate stores in China, operating since 2012. They also owned the Biopure Health infant formula business; it was sold last year. She is also a senior China analyst for Auckland-based World Civilisation Forum, an independent organisation “facilitating better understanding between China and the rest of the world”. Li says she doesn’t believe the Beingmate business can be saved.

“It’s time for the Fonterra board and management to come out and tell shareholders the full story,” she says. “Fonterra bosses should also have the guts to admit that investing $750m in Beingmate was a wrong move.

“I feel for Fonterra farmers; that’s why I have decided to go public with my concerns.”