New Hope Group Set To Stir Up Storm In China's Dairy Industry


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New Hope Group, one of China's largest private businesses, was determined to make a big entry into China's dairy market. The China Spring Candy and Wine Fair, which was held in Chengdu from March 21 to 24, was the platform for China's New Hope Group's Dairy Business to promote some of its new flagship brands. Mr Tan Ming, general manager of New Hope Dairy Company in Sichuan province, told reporters that the company has launched some of its new brand names of dairy products during the fair.             


More contents in this 4-page report include:


Company Structuring Through Mergers and Acquisitions


In November 2001, New Hope Group signed an acquisition agreement with shareholders of Yangping Dairy Company. Since then, the group has embarked on the mergers and acquisitions trail. So far, eleven companies, including Huaxi Dairy Company (located in Sichuan) and Diequan Dairy Company (located in Yunnan) have been acquired by New Hope Group. After the completion of this round of acquisition, the total assets of New Hope Group has increased to RMB1.2 billion, making it the second largest dairy group in China after Bright Dairy.  


The Search for Sources of Milk


For any dairy product company, having an uninterrupted supply of milk is certainly vital for the company's survival.


Due to the lack of milk supplies, some dairy companies are only working at half their production capacity. For quite a few small and medium dairy enterprises, milk shortages seem to be a perennial problem. To solve the problem, some milk production companies have continued to pump capital into milk processing production. However, little attention has been focused on milk source, that is, dairy farms.     


According to industry sources, Huiyuan has increased its milk production base in northeast China and Inner Mongolia. Likewise, Yili Dairy and Sanyuan Dairy have invested in dairy farms in south China, while Bright Dairy headed for north China to establish a milk - producing base. It seems that a battle for milk sources among dairy companies is brewing in China. Although New Hope Dairy is a newly established company, it has put much emphasis on searching for milk sources.


The company will be building a 1000 ton/day milk and dairy production line in Eryuan County, located in Dali District of Yunnan province. New Hope Group's strategy in the dairy business is an example worthy of emulation by others in the field.


According to statistics provided by New Hope Group, the Group's dairy business contributed over RMB1.5 billion in sales income and had generated a profit of over RMB80 million for financial year ending 2003. Therefore, income from dairy business has become the main source of profit growth for the Group.