Chinese milk companies to get $4.9b in subsidies

Chinese milk powder makers are set to receive US$4.9 billion in government subsidies to support sector consolidation, Reuters reported. Yili Industrial Group (600887.SS), China Mengniu Dairy (2319.HK), Feihe International (ADY.NYSE), and Heilongjiang Wondersun Dairy will all benefit from the subsidies. The government wants the Chinese milk powder sector to grow in order to compete with international rivals. Imported brands such as Danone (BN.EPA) and Nestle (NESN.VX) saw their market share grow due to a milk scandal in 2008 where milk powder that was tainted with melamine killed six infants and made many more ill.