Mengniu Dairy

Products

Mengniu's products include liquid milk products, such as ultra heat treated (UHT) milk, yogurt and milk beverages, ice cream and other dairy products, such as powdered milk and milk tablets. During the year that ended 31 December 2015, the company operated 33 production bases with an aggregate annual production capacity of 8.68 million tons. China Mengniu Dairy Company Limited's operates in three segments: the liquid milk products segment, which manufactures and distributes processed UHT milk, milk beverages and yogurt; the ice cream products segment, which manufactures and distributes ice cream products, and the other dairy products segment, which manufactures and distributes processed milk powder and milk tablets products. The name Mengniu literally means 'Mongolian cow'.

History

The owner and founder of Mengniu is Mr Niu Gensheng, a former employee of Yili, another Inner Mongolian dairy giant which is now Mengniu's largest competitor. He started the company in 1999, and the company's textbook growth has swept the country by storm. In 2002, Morgan Stanley, CDH Investments and China Capital Partners signed agreement with Mengniu to invest US$ 26m for a total share of 32% in the company. Mengniu then went on to be listed on the Hong Kong Stock Exchange in June 2004.

Advertising

The company is a leading manufacturer of milk, yogurt and other dairy products in mainland China, partly due to its high-profile advertising campaigns. One such campaign advertised "special milk for China's astronauts" after the successful launches of the Shenzhou 5 and Shenzhou 6 spacecraft(in fact the company sponsors the Chinese space program), and Mengniu also sponsored the popular SuperGirl contest. SuperGirl Zhang Hanyun (aka Baby Zhang) became associated with Mengniu's brand, appearing in Mengniu's commercials, which became instrumental in her elevation to fame. In marketing campaigns, it also uses the slogan "中國牛 世界牛 蒙牛", which metaphorically means "Mengniu will be outstanding in Inner Mongolia, be outstanding in China and world". The company, which has always been privately owned, has now become a symbol of entrepreneurship in China.

2008 Chinese milk scandal

Mengniu was among those named for having powdered milk samples which tested positive for melamine. The company recalled tainted powdered milks and apologised to the public. Trading in Mengniu shares on the Hong Kong Stock Exchange was suspended on 17 September. Shares in other dairy companies fell strongly the next day. On discovery that their liquid milk was also contaminated, Mengniu was stripped of its status as 'Chinese national brands'. "This is not a situation of somebody innocently cheating just to try to make a little more money," said John Eldred, managing partner of law firm Keller and Heckman LLP in Shanghai. "They are doing it with an eye toward knowing they are cheating and knowing they are risking the health of the people who are using their products." The Washington-based firm specializes in food and drug regulation.

Mengniu, whose products tested negative in Hong Kong government tests, was immediately de-listed by supermarket chains after tests showed that contaminated samples had been found on the mainland. Mengniu's CFO attempted to reassure consumers by offering a no-quibble refund on all products, and by drinking liquid milk in front of reporters. He also said that its export products were less likely to be contaminated. This comment spurred accusations on Internet bulletin boards that the company's preferential export policies was because it thought Chinese lives were cheaper than foreigners'.

In 2011 Mengniu Dairy stated that moldy cattle feed led to excessive toxin levels in its milk.

Mengniu Arla

In 2006, China Mengniu Co. Ltd teamed up with Arla Foods, the largest producer of dairy products in Scandinavia, to produce and distribute solid milk products in China, including Hong Kong and Macau. The Chinese dairy products maker said it would hold 50 percent of the venture, while Arla Foods would own 48 percent. The joint venture company was named Mengniu Arla.

On 17 September 2008, Arla Foods issued a statement on the company's web site, Mengniu Dairy, its Chinese joint venture partner, whose products have tested positive for melamine, and subsequently have been recalled and production at Mengniu Arla's powdered milk factory has been temporarily suspended.

CEO Peder Tuborgh, Arla Foods, said: "The situation is extremely distressing for all the families who need milk of the highest quality to feed their children. It is extremely important that we get to the bottom of the problem so that consumers' safety can be guaranteed and confidence in the Chinese dairy industry maintained, together with Mengniu and the authorities, we're doing everything we can to safeguard quality."