[THE INVESTOR] China’s new tougher baby formula regulations could spell trouble for Korean producers, Seoul’s trade agency warned on June 21.

According to Korea Trade-Investment Promotion Agency’s branch in Beijing, Chinese authorities will limit the number of brands and products a company can market in China from October.

Under the measures announced by China Food and Drug Administration on June 8, a single company is limited to three brands, and nine products. 

China has been beefing up regulations on baby formulas since the 2008 scandal when melamine was found in baby formula. At the time, Chinese authorities estimated the number of those affected to be about 300,000. In all, six infants died, and about 54,000 babies were hospitalized.

While China cited the need to control the number of brands and products, industry watchers say that the measure will effectively act as a non-tariff barrier for foreign producers.

Imported baby formula products are estimated to account for about 70 percent of the Chinese market.

Korean baby formulas are ranked ninth in China in terms of market share, and each company ships between seven and eight brands to China.

Last year, local baby formula makers’ exports to China came in at US$ 87.27 million, about 60 times larger than the figure recorded 10 years ago.

KOTRA expects the new measures to be a major obstacle for Korean formula makers, while local manufacturers say that China’s market will be reorganized with indigenous firms coming out on top.

By Choi He-suk (cheesuk@heraldcorp.com)