New Zealand dairy giant Fonterra has announced its intention to take a 20% stake in one of China's biggest milk processors, Beingmate.

The tie-up would help create a global supply chain aimed at China's market using Fonterra's milk manufacturing partners in Australia and Europe.

It would also help Fonterra increase its share of China's large and lucrative infant diary food market.

China relies on New Zealand for almost all its imports of milk powder.

If successful, the new partnership between Beingmate and Fonterra would see the Chinese firm set up a joint venture to buy a Fonterra plant in Australia.

It would also see Beingmate distribute Fonterra's popular Anmum brand on the mainland.

Fonterra's chief executive Theo Spierings said the partnership would be a "game changer" and that it would provide the New Zealand firm with "a direct line into the infant formula market in China".

He also said Fonterra would work with Beingmate "to evaluate mutual investments in dairy farms in China".

"The partnership will create a fully integrated global supply chain from the farm gate direct to China's consumers, using Fonterra's milk pools and manufacturing sites in New Zealand, Australia, and Europe," the firm said.

(BBC)