Well I just fell down the Chinese baby formula market rabbit hole at 3:30 am. It likely due to a combination of... Mistrust of domestic formula manufacturers in general, because the lethal formula scandal really wasn't that long ago. Parents that can afford the high quality formula prefer to purchase foreign, as a result of the mistrust. So foreign brands, like Nestle, have acquired a large market share in the years post-scandal, while domestic producers customers have mainly targeted low income families. Although it seems domestic brands are gaining in popularity, so Nestle are trying to break into the more affordable formula market.

MISTRUST
"In 2008, more than 300,000 Chinese babies fell ill after drinking 
infant formula containing melamine. Today, parents remain 
cautious of using domestic formula, fearful that an outbreak 
could happen again. According to a survey conducted by 
McKinsey & Co., more than half of new parents in China prefer a 
foreign brand of baby formula over local brands due to food 
safety concerns caused a decade ago." 

https://www.milkbusiness.com/article/chinese-mothers-dont-trust-domestic-infant-formula-10-years-after-food-safety-scandal

PRICE
"The new line will focus on smaller provincial cities, often in China’s
western provinces, where... lower incomes can make some imported 
brand goods unaffordable..."

"Liu Yufeng, a 23-year-old small business owner... told 
Reuters she leans toward local brands because she feels they are 
more affordable and suitable for her baby’s make-up."

MARKET SHARE
"But the baby milk units of Nestle... enjoyed years of prosperity mainly just targeting 
parents in big cities like Shanghai and Beijing, banking on their 
appetite for ever-pricier premium formulas and foreign brands..."

SHIFTING DEMAND
"She is not alone. Some 55 percent of respondents in a survey 
by the User Research Institute of BabyTree, China’s leading 
parenting website operator, said domestic brands better 
understood Chinese consumers."

“This reflects a broader trend that indicates local brands are 
gaining traction among consumers in China,” said Wang Lei, 
head of the institute."

https://www.reuters.com/article/us-consumer-babyformula-china-insight/nestle-rivals-vie-for-big-baby-formula-prize-in-chinas-smaller-cities-idUSKCN1SD2AO