Sodiaal aims to tap into galloping Chinese demand for infant formula through a joint venture with Synutra International, as France's largest dairy cooperative bets on export demand to ease pressure from a low-margin European milk market. Distrust of domestic Chinese suppliers, dating back to a baby milk contamination scandal in 2008, has been such that Chinese visitors have been clearing shelves in shops in Hong Kong and in Europe to get foreign-made infant formula. But strong demand from China is a structural feature of the global dairy market and would offer long-term opportunities for Sodiaal as it prepares for a liberalising of European Union milk production in 2015, the group's chief executive said. Sodiaal last year signed a 100 million euro ($130 million) deal with U.S.-listed Chinese operator Synutra to produce milk and whey powder in France from 2015 to supply to its Chinese partner, and is looking at other outlets for its Euroserum unit specialised in infant milk ingredients, Frederic Rostand said. "The Chinese market is not a just a passing fad," he told Reuters in an interview at Sodiaal's head office in Paris. "This market is so important that we have decided to open a representation office in Shanghai in the coming weeks." The Chinese market for infant formula could double in value by 2017 to $25 billion, research firm Euromonitor forecasts. Baby milk demand is part of broader growth in dairy consumption in east Asia, which has seen per capita dairy intake more than double in the past decade, according to the United Nations. Sodiaal is promoting the scale and expertise of Euroserum, which it says is the world's largest maker of demineralised whey powder used in baby milk, to Chinese customers, Rostand said. Sodiaal is not alone in targeting China. New Zealand exporters claim the lion's share of dairy commodity trade with China. Isigny Sainte-Mere, another French cooperative, this month announced an infant milk alliance with Biostime. On the retail side, international groups like Nestle and Danone have baby-milk brands as part of their China operations and are facing a pricing probe in another sign of the sensitivity of the infant milk market. Sodiaal for the moment has business-to-business relationships in China but has scope to develop downstream via its stake in Yoplait, Rostand said. U.S. group General Mills , which has majority control of the yoghurt maker, is considering new markets for Yoplait including China. More Exports and Cheese, Less Milk Rostand would not disclose Sodiaal's sales in China. Total exports account for about 30 percent of its 4.4 billion euros in sales last year. Sodiaal has been approached by other potential partners to supply dairy ingredients to emerging markets, he said, declining to give more details. Exports have become the focus for the French cooperative as it grapples with losses at its milk division Candia, hurt by supermarket price wars and stagnant consumption, and prepares for the abolition of EU production quotas that will allow the bloc's dairy farmers to produce more. "You have to go and find growth where it exists and clearly it is mainly in exports," Rostand said. The planned plant with Synutra at Carhaix in northwest France will absorb an estimated 288 million litres of milk annually from Sodiaal's 12,000 farmer members, compared with total group supply of 4.1 billion litres last year. The planned closure of three of Candia's eight plants in France by next year will further reduce Sodiaal's exposure to a low-margin milk market, following the takeover of cheese maker Entremont two years ago. The shift away from milk and towards higher-margin cheese and higher-growth exports should boost Sodiaal's bottom line, which showed pretax profit of just 16 million euros last year, and give it more scope to invest, Rostand said. Synutra is to inject 90 million of the investment in their baby milk venture. <