Yashili
| Company type | Private |
|---|---|
| Industry | Infant formula, soymilk products |
| Founded | 1983 |
| Founder | Zhang Lidian, Zhang Likun and other relatives |
| Headquarters | Chaoan, Guangdong Province , China |
Area served | China, international markets |
Key people | Zhang Lidian (Chairman) |
| Products | Infant formulas, infant rice cereals, milk powders, soybean milk powders, juice powders, corn flakes, oatmeal, preserved fruit products, nutritional supplements, health food items |
| Owner | Zhang family (52.19% stake in subsidiary) |
Number of employees | Over 5,000 |
| Website | www |
Guangdong Yashili Group Co., Ltd. () stands as a prominent private enterprise specializing in infant formula and soymilk products within China. Headquartered in Chaoan, Guangdong Province, and legally registered in the Cayman Islands, the company also manages a publicly traded subsidiary on the Hong Kong Stock Exchange known as Yashili International Holdings Limited.
The firm’s manufacturing operations are located in Heilongjiang, Shanxi, and Zhengzhou. In 2013, Yashili revealed intentions to build a production plant in New Zealand. The workforce exceeds 5,000 employees.
Products
Yashili’s portfolio encompasses more than 300 items, including infant formulas, infant rice cereals, milk powders, soybean milk powders, juice powders, corn flakes, oatmeal, preserved fruit products, nutritional supplements, and health food items distributed domestically and internationally.
Infant formula accounts for 80% of Yashili’s revenue and is marketed under two primary brands: Yashily and Scient. Its nutritional product range incorporates soymilk powder and pediatric rice flour under the Yashily brand; cereals marketed as Zhengwei; and milk powder designed for adults and adolescents under the Youyi label. Premium pediatric milk formulas are offered through Yashily’s Golden Ambery and Scient’s Merla brands. The company segments its core offerings to cater to distinct market tiers: the Yashily a-Golden and Scient Golden lines target middle to upper-tier consumers; the Yashily Newwitt and Scient Ordinary Pack series address mid-tier buyers; while Yashily New Formula is aimed at lower to mid-tier customers.
Control of the company rests with the Zhang family, which holds a 52.19% stake in Yashili International Holdings. Zhang Lidian, who co-founded the business in 1983 alongside his brother Zhang Likun and other relatives, serves as chairman. He is also a member of the Chinese committee of the International Dairy Federation and represents Guangdong province within the National People's Congress.
On September 21, 2009, the Carlyle Group purchased a 17.3% share in Guangdong Yashili Group Co. for US$100 million to bolster its research and manufacturing capabilities. By January 2013, Carlyle had increased its ownership to 24.39%. In 2009, Shanghai Fosun High Technology—a subsidiary of Fosun International Limited—acquired a 6% stake; this holding declined to 2.98% by 2013 though Fosun maintained two seats on the board.
In November 2010, Yashili listed a minority portion of its shares on the Hong Kong Stock Exchange under Yashili International Holdings Ltd (stock code 01230). Besides investments from the Zhang family’s vehicle, Carlyle, Fosun, and SPCI, public investors held 18.4%. The initial public offering generated net proceeds amounting to HK$2.31 billion.
2008 Chinese milk scandal
During 2008, melamine contamination was discovered in powdered milk products from several Chinese dairy producers, including subsidiaries of Yashili such as Guangdong Yashili Group, Shanxi Yashili Dairy, and Scient (Guangzhou) Infant Nutrition. Testing revealed that 24 out of 54 samples from these subsidiaries contained melamine. Importantly, infant formula exported by Yashili was confirmed free from contamination.
Yashili reacted by initiating recalls of affected products and publicly destroying them. The financial impact included losses totaling 787 million yuan that year due to product withdrawals and reduced sales volumes. To rebuild consumer trust, the company established a six-member safety committee chaired by Robert Brackett, former head of the U.S. Food and Drug Administration.
In early 2009, accusations emerged claiming Shanxi Yashili Dairy repackaged tainted milk powder; these allegations were denied by Yashili. Furthermore, legal proceedings involved a customer seeking damages for kidney injuries allegedly linked to Yashili products. After settling for 3 million yuan, Yashili accused the individual of extortion; he was arrested and sentenced to five years imprisonment in 2010. This conviction was overturned during a retrial in 2017.
Marketing and distribution channels
Yashili operates an extensive distribution system that spans across mainland China. Its network for milk powder sales involves approximately 1,500 regional distributors who supply more than 105,000 retail locations, including supermarkets, department stores, specialty shops, membership-based supermarket chains, and grocery outlets. Furthermore, Yashili reaches 15,000 maternal and child specialty stores, which enhances its market penetration and generates additional growth opportunities for the Group. This distribution framework is supported by a workforce exceeding 2,300 marketing professionals and over 600 liaison points.
Brand development
During the 2011 Annual Meeting on Competitiveness of Chinese Brands held in Beijing in March 2012, Yashili was honored with the “2011 Most Influential Brand Award in China.” By July 2012, the "Yashili" brand secured the 154th position in the ranking of China’s 500 Most Valuable Brands, boasting a brand valuation of RMB9.865 billion—an increase of RMB2.09 billion and an improvement of nine places compared to the previous year.
Brand positioning linked to New Zealand
At the start of 2012, Yashili initiated a promotional campaign highlighting its infant formula’s use of New Zealand milk powder under the slogan "Pure New Zealand, Cherish Yashili" (). This branding is prominently displayed on both its official website and product packaging. The flagship product line 'a-Golden Stage' () emphasizes that it is "made from high quality New Zealand sourced milk" (). According to Yashili’s 2012 interim report, all branded pediatric milk formula products primarily incorporate premium raw materials imported from New Zealand. Marketing activities featured an interactive campaign engaging five million participants and included over 2,000 parent-child roadshows across various city tiers. Winners were rewarded with “6-day trips to experience milk source in New Zealand.” Since August 2010, all infant formula milk powders have been sourced exclusively from New Zealand.
International investments
In January 2013, Yashili International Holdings revealed plans to establish its inaugural large-scale overseas processing facility in New Zealand. Situated within an industrial park at Pokeno in the Waikato region near Auckland, this plant will manufacture finished and semi-finished products such as base milk powder, with an annual production capacity of 52,000 tonnes. The project’s total investment is projected at 1.1 billion yuan (NZ$210 million), including 950 million yuan (NZ$181 million) allocated for land acquisition and construction expenses, along with 150 million yuan (NZ$28.6 million) designated as working capital for Yashili New Zealand Dairy Company. This wholly owned subsidiary will manage operations through Yashili’s New Zealand branch, Yashili International Holdings Ltd. The facility is targeted for completion in the latter half of 2014 and is expected to employ about 100 local workers. An application for investment approval was submitted to New Zealand's Overseas Investment Office towards the end of 2012.
Financial performance
For the half-year period ending 30 June 2012, Yashili Group reported revenues of RMB1,689.1 million, marking a year-on-year increase of 17.0%. When annualized, this indicates projected sales revenue for 2012 of no less than RMB3,378.2 million (equivalent to US$544 million). Sales of infant formula expanded by 20% to RMB1,448.9 million, making up 80% of total revenue during this timeframe. Sales under the Yashili brand rose by 27.3%, whereas those under the Scient brand experienced a slight decline of 0.8%. The most significant growth was observed in third-tier cities where sales of Yashili-branded infant formula surged by 54.2% to RMB458.2 million, representing 40% of total brand sales.
China infant formula market
The infant formula sector in China is characterized by a large number of brands, exceeding 100, yet only around twelve hold substantial market influence. Market size assessments differ based on the criteria used; Euromonitor International reported that in 2011, the Chinese infant formula market was valued at RMB62.1 billion and projected an annual growth rate of 15.6% through 2016, reaching RMB128.4 billion (approximately US$21 billion). These statistics suggest that Yashili captured about a 1.6% share in 2011, with the overall market estimated at roughly RMB72 billion (US$11.6 billion) in 2012.
Foreign brands control more than 80% of the infant formula market within China. After Nestle's acquisition of Wyeth in 2012, Nestle reportedly held a 14.4% market share, closely followed by Mead Johnson at 14%. Among domestic manufacturers, Yashili stands as one of the leading Chinese infant formula producers, alongside companies such as Yili and Beingmate.
References