Headquarter of Yili Group

Yili Group, China's second largest dairy producer by sales in 2008, plans to set up a dairy factory in Binhai New Area, which aims to be the largest dairy producer in northern China. The leading enterprise of the dairy industry, Inner Mongolia Yili Industrial Group was also the sole dairy sponsor for the 2008 Beijing Olympics.

This will be the company’s first expansion since it was involved in last year’s tainted milk scandal. The brand was caught up in the melamine morass that brought damaging global attention and plummeting sales to China's dairy industry. The expansion is a sign of recovery for China’s dairy industry, analysts said.

The new factory being planned is scheduled to be situated in Binhai Bonded Area, Tianjin, with a first stage of investment of up to 300 million yuan. Its dairy products will be made of raw milk from Yili Group’s raw milk base. Upon its completion, the Binhai factory will be a key production base for providing dairy products for northern China’s markets.

Since last year’s scandal, Yili is strengthening its efforts on quality control. “We discovered many dairy enterprises have serious problems in raw material supply from the tainted milk scandal. To secure the quality of Yili’s dairy products, we will accelerate constructing raw milk bases and strengthen monitoring of milk stations,” Zhang Jianqiu, CEO of Yili Industrial Group said. Experts believe safe raw milk bases are key for China’s fast-growing dairy industry.

Yili is fighting to recover from last year's tainted milk scandal. In late May, the milk giant announced that it had been appointed by the Shanghai World Expo Business Coordination Bureau as the only dairy sponsor for the 2010 event.