The 2020 Davos town saw the opening of a highly anticipated World Economic Forum. From January 21 to 24, the 50th Davos Forum was held in the Swiss alpine town of Davos, with over 2,800 representatives from 118 countries and regions, including 57 heads of state or government. In recent years, China has played an increasingly important role in the process of global economic integration, making the participation of Chinese companies in the Davos Forum even more significant. This year, over 100 Chinese representatives attended the forum. Among them, Pan Gang, Chairman of Yili Group, a leading Chinese dairy company, was invited to attend and delivered important speeches and participated in discussions.

-01- Pan Gang Proposes New 'Ecosystem Economy' Development Model On January 21, Pan Gang, Chairman of Yili Group, attended the 'China Economic Prospects' forum at the 2020 Winter Davos and proposed that the 'ecosystem economy' model will become a new driver for global development in the next decade.

What is the 'ecosystem economy'? It is a model based on whole-industry-chain cooperation, where stakeholders including governments, enterprises, investors, consumers, and social organizations jointly build a multi-win 'ecosystem' that promotes sustainable economic and social development.

Pan Gang stated that more and more leading enterprises are beginning to build their own industrial ecosystems, and these ecosystems are globalized. Each of these global industrial ecosystems collectively drives the development of the world economy and globalization.

He also proposed that 'openness, inclusiveness, innovation-driven, and win-win cooperation' are the three important characteristics of the global ecosystem economy. Yili is also striving to practice its mission of 'becoming the world's most trusted healthy food provider' in promoting the ecosystem economy.

-02- How Yili is Committed to Building a Global Ecosystem Economy

1. Health and Quality as the Cornerstone, Sharing Health with the World The pursuit of healthy food is a process that evolves with increasing consumer awareness, technological advancement, and refinement of industry segmentation and division of labor. Yili has always prioritized health.

Beyond dairy products, Yili has actively expanded its categories in recent years, deepening its layout in the broader health food industry. It has launched products such as the plant-based protein drink 'Zhi Xuan' series, the energy drink 'Huan Xing Yuan', and the milk-mineral light beverage 'Yi Ran'.

It is understood that 'Yi Ran' was inspired by Yili's years of dairy research, using milk minerals to develop a beverage. This not only represents Yili's expansion beyond dairy but also a new category pioneering in China and even Asia.

Additionally, Yili entered the coffee sector for the first time with the launch of a coffee beverage called Sheng Rui Si. It also initiated a natural mineral water project in Changbai Mountain, entering the mineral water industry.

At the 'Yili Health Night' during the Winter Davos, Yili's newly launched mineral water, Yike Huoquan, and Jindian both made appearances, fully demonstrating Yili's quality and strength as a leader in the global health food industry.

2. Innovation-Driven Development With the rise of the younger generation, consumer demand for personalized, diversified, and customized products is growing. Under Pan Gang's philosophy of 'no innovation, no future,' Yili is continuously practicing this.

To meet the needs of the large population with lactose intolerance, Yili used technological innovation to produce the first domestic milk that effectively solves lactose intolerance—Shuhua milk. Subsequently, Yili innovated the packaging of Shuhua milk, launching a new smiley-face pack that better aligns with consumer needs in design and packaging.

In terms of technological innovation, as early as 2003, recognizing that breast milk is the gold standard for infant nutrition, Yili actively conducted related research and established a Chinese enterprise breast milk research database. Over nearly 17 years, these rich research results have become an important reference and basis for Yili's infant formula ratio development.

Meanwhile, Yili partnered with Wageningen University in the Netherlands to establish the Yili European Innovation Center and jointly upgraded the breast milk database, elevating Chinese breast milk research to an international level.

Through research, Yili found that Chinese breast milk composition is not exactly the same as that from other parts of the world, and even differs significantly. Chinese mothers need formula that is closer to Chinese breast milk composition and more suitable for Chinese babies. After identifying this issue, Yili successfully developed the 'Jinlingguan' series of infant formula through innovative R&D, which gained high market recognition.

Yili did not stop there. When it discovered that goat milk powder has natural components and structural advantages closer to human milk, better meeting the nutritional needs of Chinese babies, Yili innovatively developed Jinlingguan goat milk powder—Youzi Xiaoyang—in December last year. The successful launch of this product attracted attention from China and the world.

3. Joint Construction with Global Partners Pan Gang believes that only through win-win cooperation can the entire 'ecosystem' achieve sustainable development and promote the sustainable development of the entire world economy.

In the context of global economic integration, countries are increasingly intertwined and share a common destiny. Only through mutual collaboration and complementary advantages, forming a deeply integrated global industrial chain, can we jointly build a global health ecosystem.

During the second China International Import Expo (CIIE) held in November this year, Yili signed agreements with 13 global strategic partners, including Tetra Pak, Cargill, and Firmenich, to create the industry's first 'Sustainable Development Supply Chain Global Network,' building a closer win-win cooperation model.

At the second CIIE, Yili signed agreements with global strategic partners.

The holding of 'Yili Health Night' at the 2020 Winter Davos is an important action by Yili to practice the 'ecosystem economy' development model and build a 'global health ecosystem.' As the only major event focused on 'health' at this Winter Davos, 'Yili Health Night' attracted many distinguished guests.

At the 'Yili Health Night' event, guests including Tetra Pak President and CEO Olavi, Cargill Chairman and CEO MacLennan, DuPont Food & Beverage President Amy Byrick, Firmenich President Paul, Roquette Group Chairman Edouard Roquette, and Chr. Hansen Board Director Mark Wilson gathered to discuss development and envision the future. They jointly launched the 'Global Health Ecosystem Initiative' with Yili, pooling global efforts to build health.

Based on the corporate vision of 'becoming the world's most trusted healthy food provider,' Yili will continue to actively promote the 'global health ecosystem,' moving forward hand in hand with global partners to build a promising new decade.

-03- 'Ecosystem Economy' May Become the Future Development Model for Enterprises Yili is actively practicing the 'ecosystem economy' development model and has achieved phased results.

In 2019, in the first three quarters alone, Yili achieved total operating revenue of 68.677 billion yuan and net profit of 5.648 billion yuan, achieving high double-digit growth while setting a new record for Asian dairy. Among them, core indicators such as total operating revenue, net profit, comprehensive market share, and consumer penetration ranked first in Asia for consecutive years, and return on net assets continued to lead the global dairy industry.

To date, Yili has built a backbone network covering global resource systems, global innovation systems, and global market systems across Asia, Europe, the Americas, and Oceania. In 2020, under Pan Gang's leadership, Yili will build a 'global health ecosystem' and bring better products to consumers worldwide.

As the first Chinese food and dairy company to establish a strategic partnership with the World Economic Forum, Yili continues to contribute the wisdom and strength of Chinese enterprises at the Davos Forum.

Future enterprise competition will not be a single-point competition but competition across the entire industrial chain. The integration and joint development of the entire industrial chain is the key to long-term sustainable development. The 'ecosystem economy' may become the future development model for enterprises, leading Chinese enterprises to innovate and move forward to the world!

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