Taiyuan Milk Powder Network www.naifen8.com Consultation (0351) 8217018 Address: Room 8, No. 49 Wuyi Road, Taiyuan City (200 meters south of the Copper Bay Metro Supermarket, 50 meters south of the Industrial and Commercial Bank of China, on the 8th floor of the "7 Days Chain Store").
After the dairy industry crisis, accompanied by the trend of the shrinking market share of domestic milk powder, foreign brands have taken the opportunity to expand their territories and advance aggressively. According to customs statistics, in the first quarter of this year, China imported 192,000 tons of milk powder and other dairy products, valued at $4.8 billion, representing increases of 35.3% and 76.4% respectively compared to the same period last year. The expansion in quantity combined with a sharp rise in prices has allowed foreign milk powders to operate freely in the Chinese market.
In terms of market structure, the current state of the national milk powder industry is not optimistic. According to information from CITIC Securities, foreign brands have already captured more than 70% of the mid-to-high-end milk powder market, leaving many Chinese companies to compete only in the mid-to-low-end segment.
Insightful individuals point out that all of the top 20 international dairy enterprises have entered China. After occupying the first-tier markets, foreign milk powders will inevitably move towards second and third-tier cities, making the remaining survival space for domestic milk powders precarious. Facing this severe situation, how can the national milk powder industry break through and save itself?
Solving the fatal weakness of milk sources
The premise of self-rescue is to understand the root cause of the problem. The fundamental issue of the milk powder industry's predicament lies in an outdated industrial system that lags behind market demand development. In the traditional sense, Chinese milk powder enterprises only handle production and sales, resulting in numerous uncontrollable links in the upstream and downstream of milk powder enterprises. Any problems occurring in any one of these links could lead to fatal milk powder safety incidents.
The "melamine incident" clearly demonstrated that milk sources are the weak link in China's milk powder manufacturing. Until this problem is thoroughly resolved, national enterprises cannot truly develop.
Currently, whether in the northern regions where milk production is concentrated or the southern regions where milk consumption is concentrated, milk source development models do not go beyond the "farmer model" and the "farm model." The former involves scattered farming by farmers, manual milking, and enterprise acquisition, while the latter is characterized by large-scale farming by enterprises, automatic milking, and scientific management. Which model is better needs no explanation. However, the cost of the "farm model" for milk sources is quite high as it requires integrating the upstream livestock farming industry, even the feed planting industry, into milk powder manufacturing.
Taking Feihe Dairy as an example, since 2007, it has started building European and American demonstration farms with ten thousand cows, with an initial investment of about RMB 30,000 per cow. Currently, Feihe has built three ten-thousand-cow farms in the optimal dairy cattle breeding belt at 47 degrees north latitude, which can fully meet the high-quality milk source requirements for infant formula milk powder production. Moreover, Feihe has also incorporated the most upstream forage planting and compound feed processing industries into the entire production chain, establishing forage planting and compound feed processing companies. Leveraging the unique natural conditions of Northeast China's black soil, they produce and process feed raw materials according to green organic systems, ensuring the high-quality nutrition of the feed for the farm herds.
Industry insiders generally believe that milk source construction is a trump card in Feihe's hands. Although the short-term investment is large and the recovery cycle long, the long-term benefits and brand effects of self-built milk sources are enormous. During the "melamine incident," when the dairy industry was in turmoil, Feihe was one of the few clean brands, a fact that serves as excellent evidence of the effectiveness of the "farm model" for milk source construction.
Autonomous Innovation is Key to Advancing to High-End
To compete with foreign milk powders, low-end tactics akin to "millet plus rifles" will inevitably be fruitless. To capture high-end market shares, national milk powder enterprises must pursue the path of independent scientific and technological innovation.
However, innovation isn't just about shouting slogans; only by genuinely incorporating independent innovation into the crucial part of corporate development strategies and implementing it earnestly can a company possibly become a leader in its target market.
"Copying and playing on the edge is not true independent innovation. It might allow a company to profit in the short term, but it doesn't help cultivate core competitiveness," pointed out an unnamed expert in the industry. "Possessing core technologies with independent intellectual property rights is the key to China's dairy industry achieving true independent innovation."
Fortunately, many dairy enterprises in the industry, such as Feihe, have always made scientific and technological innovation their development policy. Feihe Dairy consistently relies on technological innovation to expand its space, concentrating maximum funds on research and development, adhering to the research and development policy of 'independent innovation, key leaps, supporting development, leading industry trends', and using the Feihe Mom and Baby Nutrition Research Center as a platform to launch high-tech content high-end milk powders like Xingfeifan.
Full Industry Chain Integration and Breakthrough
Whether it's the integration of upstream and downstream enterprises for milk source construction or occupying the high-end market through independent innovation, the most effective and thorough strategy is to take the enterprise as the main body, integrate the entire industry chain covered by milk powder production, forming a full industry chain with scale, credibility, technology, and brand, achieving coordinated participation and mutual promotion between upstream and downstream.
The full industry chain strategy is a major trend for the development of large food and agricultural-related enterprises, and the dairy industry is no exception. Currently, Feihe is the only enterprise in the domestic infant milk powder manufacturing field that owns a full industry chain, and its exemplary significance is inspiring. From the origin of the industry chain to the consumer terminal, Feihe integrates resources at every link, forms an industry chain interest community, chains and systematizes the "company + farm" model, and ensures the foundation for producing nutritious, safe, and reliable infant milk powder from a systemic perspective.
All of these indicate a promising direction for national milk powder enterprises to break through and achieve vigorous development.
Some say that the Chinese milk powder industry is at its most dangerous moment. If no countermeasures are taken, in ten years, the form of existence for "national dairy" will be most families raising their own dairy cows, which may not be an exaggerated statement. "There has never been a savior or a god emperor," Chinese milk powder enterprises cannot wait for salvation from others. The only way out is to integrate strong resources, form a scaled and systematic full industry chain, and achieve self-rescue and self-strengthening.