Mengniu Group
CHAPTER 1 - INTRODUCTION
Background Founded in 1999, Mengniu Group (Mengniu) has grown rapidly to become the leading dairy product manufacturer in China. It’s principal products are liquid milk (UHT milk-Ultra-high-temperature pasteurized milk, milk beverages, and yogurt), ice-cream, and other dairy product such as milk powder, milk tea powder, and tablets. Mengniu has overtaken it’s long-established state-owned rivals through dedication to quality and innovation in all aspects of its business, including marketing, governance, and aggressive adoption of international quality and best practice standards. Mengniu is a manufacturer of milk products based in Inner Mongolia, famous for its grasslands and one of the traditional dairy regions of China. Mengniu was privately founded in 1999 by a management team with long experience in one of Inner Mongolia’s state-owned milk product companies, Monglia Yili Industrial Group (Yili). Mr. Niu Gensheng, the founder and the chairman of Mengniu, had lost his position as vice-president of sales at Yili after an internal power struggle in 1999. Mr. Niu had worked at Yili for 17 Years and his father before him for 38 years. Mr. Niu, and the small but experienced management team he brought with him from Yili, started Mengniu with $ 12,600 of their own capital. 1 (Business Week,, 2005) Mengniu Competes fiercely with Yili and the other big Chinese dairy, Bright Dairy & Food. The three companies collectively controlled approximately 60 percent of the market as Aug 2005. 2 (Business Week,, 2005)
Research Problem Only 8 Years, Mengniu has grown explosively, overtaking Yili as the top seller of milk and simultaneously becoming one of China’s best-known brands. According to AC Nielsen (December 2007), Mengniu held 40.7% share of the liquid milk market (excluding milk beverage and yogurt) in China in terms of sales revenue, representing an increase against 36.2% in December 2006, continued to champion the market
Background Founded in 1999, Mengniu Group (Mengniu) has grown rapidly to become the leading dairy product manufacturer in China. It’s principal products are liquid milk (UHT milk-Ultra-high-temperature pasteurized milk, milk beverages, and yogurt), ice-cream, and other dairy product such as milk powder, milk tea powder, and tablets. Mengniu has overtaken it’s long-established state-owned rivals through dedication to quality and innovation in all aspects of its business, including marketing, governance, and aggressive adoption of international quality and best practice standards. Mengniu is a manufacturer of milk products based in Inner Mongolia, famous for its grasslands and one of the traditional dairy regions of China. Mengniu was privately founded in 1999 by a management team with long experience in one of Inner Mongolia’s state-owned milk product companies, Monglia Yili Industrial Group (Yili). Mr. Niu Gensheng, the founder and the chairman of Mengniu, had lost his position as vice-president of sales at Yili after an internal power struggle in 1999. Mr. Niu had worked at Yili for 17 Years and his father before him for 38 years. Mr. Niu, and the small but experienced management team he brought with him from Yili, started Mengniu with $ 12,600 of their own capital. 1 (Business Week,, 2005) Mengniu Competes fiercely with Yili and the other big Chinese dairy, Bright Dairy & Food. The three companies collectively controlled approximately 60 percent of the market as Aug 2005. 2 (Business Week,, 2005)
Research Problem Only 8 Years, Mengniu has grown explosively, overtaking Yili as the top seller of milk and simultaneously becoming one of China’s best-known brands. According to AC Nielsen (December 2007), Mengniu held 40.7% share of the liquid milk market (excluding milk beverage and yogurt) in China in terms of sales revenue, representing an increase against 36.2% in December 2006, continued to champion the market
References: • Personal communication with CDH China Fund; Business Week, “China’s Free Range Cash Cow,” October 24, 2005. • Business Week, “China’s Free Range Cash Cow,” October 24, 2005. • The Standard, China’s Business Newspaper, Top Stories: “Mengniu reaps 34 percent gain in profi ts as sales climb,” August 24, 2005. • The Shewhart chart is named after Walter A. Shewhart (1891-1967), a physicist at the Bell Telephone Laboratories, who introduced the method in 1924 and elaborated upon it in his book Economic Control of Quality of Manufactured Product, (1931). • http://www.gmanews.tv/story/120902/Chinas-biggest-dairy-recalls-baby-formula# • China Daily September 7, 2007