Currently per capita consumption of dairy products in China is low. The question as to whether China’s strong economic growth and the resulting higher consumer income would represent a great market potential for dairy products has drawn much interest from the dairy industry both within and outside China. This paper overviews China’s dairy market with up-to-date information and highlights important factors affecting its development. The study shows that the growth of demand for dairy products in China is promising. However, despite the fact that China’s accession to the WTO will result in reductions in trade barriers, a substantial increase in exports of dairy products to the Chinese market is unlikely in the near future. This is due to a number of reasons including taste differences between the Chinese and the consumers of major dairy exporting countries. To succeed in the Chinese market, dairy exporters need to increase their understanding of the Chinese dairy markets and to consider modifying their products to suit the tastes of the Chinese.