Core Insights - The Chinese infant formula market is experiencing a significant shift, with foreign brands showing strong growth despite an overall market increase of only 0.5% [1][3] - The return of foreign brands marks a new phase in the competitive landscape of the Chinese infant formula market, which has seen dramatic changes over the past two decades [3][5] Market Dynamics - In 2008, the melamine scandal led to a collapse in consumer trust for domestic brands, allowing foreign brands to capture up to 60% market share [3][5] - The following decade was dominated by foreign brands, with companies like Mead Johnson and Wyeth leading the market [5] - A turning point occurred in 2017 when domestic brands began to regain market share, culminating in Feihe surpassing Wyeth in 2019 [5][8] Current Performance - In the first half of 2025, Feihe reported a revenue decline of 9.36% and a net profit drop of 46.66%, while foreign brands like FrieslandCampina and A2 Milk Company continued to grow [8][9] - FrieslandCampina's brand, Friso, has become the leading international brand in the Chinese infant formula market, with its product becoming the best-selling SKU [8][11] Strategies of Foreign Brands - Foreign brands are leveraging a three-pronged strategy to reclaim market share: 1. **Premiumization**: Focusing on high-end products, with the ultra-premium segment accounting for 64.4% of the market [10][11] 2. **Channel Penetration**: Expanding into lower-tier cities through digital platforms, enhancing direct connections with retailers [15][16] 3. **Price Stability**: Maintaining price integrity amidst a domestic price war, ensuring profitability for retailers [16][17] Challenges for Domestic Brands - Domestic brands face significant challenges, including a fragmented pricing structure and declining consumer confidence [18][20] - The transition to new national standards has led to pricing chaos and reduced channel profitability [20] - Domestic brands are also struggling with cost competitiveness, as imported raw materials can be cheaper than local production [20] Strategic Shifts for Domestic Brands - Domestic companies are diversifying their product offerings and exploring international markets to counteract declining sales [21][23] - The focus is shifting towards all-age nutrition, expanding from infant formula to products for children, adults, and seniors [23][30] Future Outlook - The restructuring of the market is underway, with an increasing concentration of market share among leading brands [24][29] - The competition is evolving from basic nutrition to advanced ingredient development, with a focus on active components like HMO [26][30] - Foreign brands are localizing their supply chains to enhance competitiveness in the Chinese market [27][28] Conclusion - The infant formula industry in China is entering a new phase of refined competition, where trust and innovation will be key determinants of success [30][31]