Behind the Counter-Trend Growth: Why Mengniu Bets on This 'Wild Goose'

As competition in the dairy industry intensifies, the deep integration of digitalization with the entire dairy supply chain has become a major trend. Since the pandemic, under the pressure of insufficient market demand, Mengniu's pure milk, fresh milk, and other businesses have achieved counter-trend growth, with sales volume increasing by double digits and retail cheese performance growing by over 130%. This is inseparable from its complete offline distributor channel network and its exploration of digitalization. Recently, Mengniu Group fully integrated with MYbank's digital supply chain finance 'Wild Goose System'. With the help of the 'Wild Goose System', the financing approval rate for Mengniu's downstream distributors has risen to 80%, and distributors who obtained financing saw a 22% year-on-year increase in sales. In the future, Mengniu plans to collaborate with MYbank to provide more than one million downstream small and micro business operators with comprehensive financial services at more favorable interest rates, alleviating their capital flow pressure. Currently, Mengniu has nearly 20,000 distributors nationwide, covering more than 1.3 million terminal stores. Basically, every county has a first-level distributor, and there are township-level distributors. However, downstream merchants have long faced difficulties in obtaining loans, leading to insufficient capital supply. As early as 2009, Mengniu introduced financial institutions to provide financing services for downstream distributors. Fan Dong, Senior Director of Mengniu's Capital Management Department, said, "At that time, loans basically served the top 30%, the large distributors with sales above 10 million yuan. But as we expanded the market and deepened channel penetration, the mid-to-long-tail distributors and the capillary network could not be supplied." Image source: Mengniu official website The 'Wild Goose System' aims to change the head effect, allowing the capillaries to also receive financial blood supply. It is understood that MYbank's 'Wild Goose System' is a digital supply chain finance solution developed based on the supply chain relationships between core enterprises and upstream and downstream small and micro enterprises. It addresses the credit needs and comprehensive fund management needs of small and micro enterprises throughout their entire production and operation chain, including supply payment, procurement ordering, distribution collection, franchising, and payroll. The traditional supply chain finance model typically relies on the core enterprise as the '1', serving the 'N' small and micro enterprises around the core enterprise. Digital supply chain finance aims to be more inclusive, treating each 'N' as a center, a new '1', to explore and serve more 'N' behind them, serving users at the N2 level, providing pure credit and pure online credit services to more small and micro operators.

Digital financial services no longer require corporate guarantees, and the entire process is completed online. With MYbank's 310 model, 3 minutes to apply, 1 second to pay, and 0 manual intervention, it can be used with Alipay or the MYbank app, solving problems such as cross-region credit, cross-region loans, and cross-region credit usage.

Li Wang from Rugao City, Jiangsu Province, has been an agent for Mengniu products. "To stock up, I often need loans. Every year, I had to travel thousands of miles by plane to the headquarters in Inner Mongolia to sign contracts, costing five to six thousand yuan per round trip. Alternatively, I could mortgage my house at a bank in the town, but houses in the county are not worth much, and I couldn't get much money from the mortgage."

For Li Wang, the change brought by digital finance is convenience. He no longer needs to 'fly' to get a loan, nor does he need to mortgage his property. With a few clicks on his phone, he can get funds from MYbank without leaving home, giving him more energy to expand the market and increasing his sales. Li Wang's situation is not unique. Since Mengniu cooperated with MYbank, which was initiated by Ant Group, the financing approval rate for downstream distributors has risen to 80%, with users in the central and western regions accounting for 58%. It also has a significant pulling effect on brand sales. According to data from Mengniu's supply chain financing platform, in 2020, distributors who did not use financing saw a 10% year-on-year increase in sales, while distributors who used MYbank's digital financial services saw a year-on-year increase of over 22% in sales in 2020. Fan Dong, Senior Director of Mengniu's Capital Management Department, said, "In the future, we will continue to cooperate with MYbank to help downstream distributors and sales companies solve financing difficulties, rapidly expand business scale, increase market share, and help small and micro merchants grow together." It is understood that this year, to fully support financial services for small and micro enterprises, the All-China Federation of Industry and Commerce and six banks, including MYbank, jointly launched the 'Assisting Micro Enterprises Plan'. MYbank, together with more than 500 brands including Mengniu that have integrated with the 'Wild Goose System', is carrying out actions to assist micro enterprises, providing special fund support to small and micro operators in the supply chain through measures such as reducing interest and fees, to help small and micro enterprises. Are you 'watching' me?