New Zealand First leader Winston Peters has attacked Fonterra's decision to do a deal with a Chinese company, saying it could lead to New Zealand losing control of the dairying sector.
The dairy co-operative is planning to invest up to $615 million in a partnership with Chinese infant food manufacturer Beingmate.
The companies would work together in developing milk powder production plants in China and Australia. There will also be a distribution agreement to market Fonterra's Anmum brand infant formula through Beingmate's network of retail outlets.
Speaking in Takapuna this morning, Mr Peters said the Fonterra deal seems to be doing the reverse of what Chinese companies were doing by setting up their own milk powder plants in New Zealand .
"In short, there is a huge contrast in the strategies of the two entities. China in this case with two companies 100 percent owned by the Chinese Government, as opposed to Fonterra, seemingly unaware of the dangers of brand New Zealand now being in the control of outside entities. This is not a smart long-term investment, or marketing move".
Mr Peters said Fonterra should be investing and creating jobs in New Zealand.
But Labour leader David Cunliffe supports Fonterra's proposal.
"Fonterra, from what I can see, has made a prudent investment to get closer to customers by getting a stake in a leading domestic brand. That sounds like good business to me.
"I'm sure that they have made an investment on the basis of commercial advantage to them and thereby to New Zealand, otherwise they probably wouldn't have done it."
Mr Cunliffe said he wanted to see more New Zealand businesses involved in ventures that add value to raw production.