China Huishan Dairy, a vertically integrated dairy company in China, has entered into a joint venture (JV) deal with Royal Friesland Campina, to produce, market and distribute a new infant formula brand in China.

As per the terms of the deal, FrieslandCampina will provide China Huishan access to its existing sales and distribution network in infant milk formula in the country.

In the new entity (JV), Huishan Dairy and Royal Friesland Campina will each have 50% stake.

The JV will own Huishan Dairy’s dairy plant in Xiushui near Shenyang and Huishan Dairy will supply raw milk to the plant from its farms.

Also, FrieslandCampina is seeking to invest CNY700m (€90m) for a 50% stake in the Xiushui dairy plant and will buy €24m worth of Huishan-shares on the Hong Kong Stock Exchange.

Huishan Dairy CEO Yang Kai said: "The Chinese infant milk formula market is an attractive and fast-growing market. Both our companies want to grow in this market. The joint venture between Huishan and FrieslandCampina will locally source and produce infant milk formula for the Chinese market and have full control over the entire supply chain.

"The joint venture will ramp up its infant milk formula production, taking advantage of FrieslandCampina’s existing sales and distribution network in China."

Huishan will continue to market its own brands and FrieslandCampina’s Friso brand will continue to be exclusively produced in the Netherlands and imported and marketed by FrieslandCampina in China.