---
title: "Mengniu Executives Reshuffled: How Foreign-系 President Lu Minfang Is Deploying His Forces"
description: "Mengniu Dairy has undergone an internal reshuffle, replacing the general managers of its low-temperature, ice cream, and milk source divisions, effective September 12. President Lu Minfang, known for his performance-driven and iron-fisted management, is focusing on narrowing the gap with industry leader Yili."
author: "杨泽世"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2018-09-22"
language: "en"
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# Mengniu Executives Reshuffled: How Foreign-系 President Lu Minfang Is Deploying His Forces

> Mengniu Dairy has undergone an internal reshuffle, replacing the general managers of its low-temperature, ice cream, and milk source divisions, effective September 12. President Lu Minfang, known for his performance-driven and iron-fisted management, is focusing on narrowing the gap with industry leader Yili.

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**Lu Minfang places greater emphasis on performance assessment, adopts iron-fisted management, and his principle is to promote the capable.**
Recently, Blue Whale Industry and Economics reporters learned that Mengniu Dairy (02319.HK) has made internal personnel adjustments, with the general managers of its low-temperature division, ice cream division, and milk source division being replaced successively. The adjustments took effect on September 12, after which the three division general managers will report directly to Mengniu Dairy President Lu Minfang.
In the industry's view, Lu Minfang's iron-fisted policy is to promote the capable and dismiss the incompetent, letting performance speak. Over two years, Mengniu Dairy turned losses into profits. Against this backdrop, Lu Minfang is conducting a new round of troop deployment. How to further gain market share and narrow the gap with industry leader Yili in the upcoming market tests is his new challenge.
**Major Executive Reshuffle**
It is reported that in this personnel change, Liu Shengli, Vice President of Mengniu Dairy and former General Manager of the Low-Temperature Division, has been transferred to General Manager of the Ice Cream Division; Wen Yongping, former General Manager of the Milk Source Division, succeeds Liu Shengli as General Manager of the Low-Temperature Division; Zhao Jiejun, former General Manager of the Planning and Logistics Center of the Ambient Division, has been promoted to Assistant Vice President of Mengniu Dairy and appointed General Manager of the Milk Source Division, while also overseeing the Engineering Management Department.
According to Blue Whale Industry and Economics reporters' research, Liu Shengli has held positions including General Manager of the Marketing System of the Ambient Liquid Milk Business Division, General Manager of the Ice Cream Business Division, Assistant to the President, and Group Vice President; Wen Yongping has held positions including General Manager of the Production Command Center, Assistant Vice President of Operations, and Vice President of Milk Source Management.
Industry insiders point out that low-temperature products are currently a business that dairy companies are vigorously developing. Transferring Wen Yongping from the Milk Source Division to the Low-Temperature Division as General Manager shows that his abilities have been recognized by Lu Minfang, and the future performance of low-temperature products deserves attention.
However, Blue Whale Industry and Economics reporters noticed that in the above personnel adjustments, the whereabouts of the former General Manager of the Ice Cream Division was not disclosed. Reviewing Mengniu's performance reports since Lu Minfang took office, the ice cream business revenue for 2016 and 2017 was 2.180 billion yuan and 2.513 billion yuan respectively. In 2017, Mengniu launched 42 ice cream products, among which the Suibian Suixin Guo series achieved annual sales exceeding 100 million yuan. In addition, in Mengniu's just-released 2018 interim report, its ice cream business grew 12.8% year-on-year.
It is evident that Mengniu's ice cream business has been growing in recent years, but during this personnel adjustment, the whereabouts of its general manager remains unknown.
Some industry insiders say that the sudden personnel adjustment of the division general manager positions is not unrelated to individual capabilities, because the "new chief" Lu Minfang believes in the principle of "the capable rise."
Dairy expert Song Liang told Blue Whale Industry and Economics reporters that this internal personnel adjustment is to ensure the overall business develops well, so the changes are normal. Zhu Danpeng, a Chinese food industry analyst, also believes that Mengniu Dairy has entered a healthy development track since Lu Minfang took over, and this personnel change is to match Mengniu's medium- and long-term development.
Furthermore, Song Liang believes that the three general managers reporting directly to Lu Minfang is because Mengniu has been promoting overall flat management, with divisions reporting directly to the president. This feature was a reform promoted by former President Sun Yiping during her tenure. Flat management allows the company to quickly extend decisions to the front lines of production and marketing, improving communication and execution efficiency.
It is worth noting that Blue Whale Industry and Economics reporters reviewed Mengniu's 2018 interim report: revenue was 34.474 billion yuan, up 17% year-on-year; net profit was 1.562 billion yuan, up 38.5% year-on-year. In comparison, Yili achieved operating revenue of 39.589 billion yuan, up 18.88% year-on-year, and net profit of 3.446 billion yuan, up 2.43% year-on-year. From specific data, since Lu Minfang took over as President of Mengniu, the revenue gap with Yili widened from 3.837 billion yuan in the same period of 2017 to 5.115 billion yuan, but the net profit gap narrowed from 2.236 billion yuan to 1.884 billion yuan.
**The "Test" on the Predecessor's Shoulders**
According to data, Lu Minfang joined Mengniu Dairy in 2016. On the evening of September 15 that year, Mengniu suddenly announced that Sun Yiping, then President, had resigned from her positions as Executive Director, President, and member of the Strategy and Development Committee, and was succeeded by Lu Minfang, then President of subsidiary Yashili, as President of Mengniu.
At that time, the industry was not optimistic about the new president. Song Liang told Blue Whale Industry and Economics reporters that the initial lack of optimism was because Lu Minfang had only managed a milk powder company, not a large dairy enterprise like Mengniu; secondly, Lu Minfang belonged neither to the COFCO faction nor the Mengniu faction, which could cause integration issues with the team. But now, judging from Mengniu's development, these are no longer problems.
In the eyes of outsiders, Lu Minfang is the fourth-generation leader of Mengniu after Niu Gensheng, Yang Wenjun, and Sun Yiping, representing the foreign-invested faction. Data shows that Lu Minfang previously served as President of Yashili Group, a subsidiary of Mengniu. Before joining Yashili, he was Vice President of Danone Early Life Nutrition Greater China, serving Danone Group and Dumex Baby Food Co., Ltd. for many years. Before joining Danone, he worked at Johnson & Johnson (China) for 9 years and at General Electric (China) for nearly 4 years.
Industry insiders point out that Lu Minfang has rich management experience and has long worked in dairy companies, familiar with the industry's market environment and future development trends. At the same time, Lu Minfang places more emphasis on performance assessment, adopts iron-fisted management, and his principle is to promote the capable.
Lu Minfang once pointed out at an investor meeting that finding the reasons for the gap with competitors would be a key focus in his upcoming strategy. Mengniu's goals are product innovation, improving operational efficiency, continuously improving channel models, and enhancing profitability. Subsequently, Lu Minfang adjusted Mengniu's business framework, splitting the original core business into four divisions: ambient, low-temperature, ice cream, and milk powder.
It is understood that since Lu Minfang took over Mengniu, except for a loss in 2016, performance has been on an upward trend in 2017 and the first half of 2018. In fact, Mengniu's own various business segments were also growing in 2016, but the poor performance of its subsidiaries Yashili and Modern Dairy dragged down Mengniu.
In the first half of 2018, Yashili turned profitable, and Modern Dairy also significantly reduced losses with Mengniu's "support." Data shows that Yashili achieved revenue of 1.504 billion yuan in the first half of 2018, up 55.6% year-on-year; Modern Dairy achieved operating revenue of 2.468 billion yuan, up 5.3% year-on-year, with losses reduced by 500 million yuan compared to 2017.
It is worth mentioning that Yashili and Modern Dairy were both acquired through mergers and acquisitions during Sun Yiping's tenure as President. Sun Yiping, a representative of the "COFCO faction," always advocated an international route, introducing foreign capital and conducting M&A: bringing in French Danone and Danish Arla as shareholders of Mengniu; acquiring Yashili and becoming the largest single shareholder of Modern Dairy; and acquiring Dumex's China business.
However, all this only increased Mengniu's revenue to over 50 billion yuan, but did not narrow the gap with Yili. Data shows that Mengniu's revenue from 2013 to 2016 was 43.357 billion, 50.049 billion, 49.027 billion, and 53.779 billion yuan, while Yili's revenue in the same period was 47.779 billion, 54.436 billion, 59.863 billion, and 60.312 billion yuan, with the maximum gap reaching nearly 10 billion yuan. In terms of net profit, Mengniu achieved 1.631 billion, 2.35 billion, 2.367 billion, and -0.0075 billion yuan in these years, while Yili's figures were 3.187 billion, 4.144 billion, 4.632 billion, and 5.661 billion yuan, with the gap widening.
Therefore, when Sun Yiping left, some analysts directly stated that the real reason might be that the gap between Mengniu and Yili widened during her tenure, and she was "paying the price" for poor performance.
"Lu Minfang and Sun Yiping, as representatives of the foreign-invested and COFCO factions respectively, neither is more suitable for Mengniu. Sun Yiping laid the foundation for Mengniu's overall sound development during her tenure, while Lu Minfang focuses more on market expansion. Both have their own strengths," Song Liang said.
Some industry insiders also point out that from being initially underestimated to securing the helm of Mengniu through performance, Lu Minfang is now using his "iron-fisted" approach to adjust personnel to better implement his management strategies. How Mengniu further narrows the gap with industry leader Yili will be the real test of his capabilities.
This article is sourced from: Blue Whale Industry and Economics.
**On October 23-24, during the Autumn Sugar and Wine Fair, New Distribution will host the "2018 FMCG City Distribution and Logistics Conference."** At that time, we will invite industry experts, FMCG warehousing and distribution specialists, and distributors who have transformed into unified warehousing and distribution platforms to discuss and answer questions about the future development trends of FMCG city distribution and logistics, as well as practical cases of distributor transformation. We hope it will bring you different inspiration and thinking!
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