---
title: "Prince Milk Founder Li Tuchun: From Hundreds of Millions in Assets to Nothing, Capital Does Not Believe in Tears!"
description: "After being acquitted, Prince Milk founder Li Tuchun often said, \"Many private entrepreneurs are arrested when they grow big; going public is like going to prison.\" He was the first famous private entrepreneur in China to be arrested and then acquitted, while his rival, the state-owned enterprise manager Wen Dibo, was placed under investigation and later sentenced to nine years in prison for corruption and dereliction of duty. Based on these facts, Li Tuchun claimed that Prince Milk was bankrupted by this corrupt official and foreign financial institutions that withdrew funds, but the public did not fully accept this conclusion."
author: "New Distribution"
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published: "2017-06-23"
language: "en"
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---

# Prince Milk Founder Li Tuchun: From Hundreds of Millions in Assets to Nothing, Capital Does Not Believe in Tears!

> After being acquitted, Prince Milk founder Li Tuchun often said, "Many private entrepreneurs are arrested when they grow big; going public is like going to prison." He was the first famous private entrepreneur in China to be arrested and then acquitted, while his rival, the state-owned enterprise manager Wen Dibo, was placed under investigation and later sentenced to nine years in prison for corruption and dereliction of duty. Based on these facts, Li Tuchun claimed that Prince Milk was bankrupted by this corrupt official and foreign financial institutions that withdrew funds, but the public did not fully accept this conclusion.

"Many private entrepreneurs are arrested when they grow big; going public is like going to prison."
After being acquitted, Prince Milk founder Li Tuchun often used this phrase to protest his 15 months of wrongful imprisonment. Among China's famous private entrepreneurs, he was the first to be arrested and then acquitted, and before his release, his rival, the state-owned enterprise manager Wen Dibo, who was in charge of Prince Milk, was placed under investigation and later sentenced to nine years in prison for corruption and dereliction of duty.
Based on these facts, Li Tuchun confidently claimed that Prince Milk was completely bankrupted by this corrupt official and the foreign financial institutions that had withdrawn funds earlier. However, the public did not fully accept this conclusion, and many believed that Li Tuchun himself should also be responsible for the bankruptcy of Prince Milk.
**1**
In 1960, Li Tuchun was born in Linxiang, Hunan. Less than three months after birth, a tooth grew in his mouth. His grandfather thought it was unlucky, but no matter how hard his father tried, he couldn't pry open Li Tuchun's little mouth. His grandfather muttered to himself, "He will be a stubborn one in the future."
Indeed, as soon as Li Tuchun started elementary school, he became fascinated with "The Legend of Li Shimin," and from then on, he became addicted to military strategy books, reading "The Thirty-Six Stratagems," "The Art of War," one after another.
At the age of 17, Li Tuchun was determined to join the army, but due to his family's poor class background, he had to attend Zhuzhou Normal School. After graduating in 1982, he was assigned to work at a grain and oil company in Zhuzhou.
In the first year, he was sent to a dumpling restaurant for a temporary post. While more than ten other classmates just went through the motions, Li Tuchun seriously learned to make dumplings from the master chefs in the kitchen. Within less than three months, he mastered the skill. "With free-range pork and cabbage, mixed with scallions, ginger, and sesame oil, the taste was exceptional."
When the headquarters HR saw that Li Tuchun was working happily at the grassroots level, they simply let him be. For the next eight years, Li Tuchun moved from one dumpling restaurant to another noodle shop, but his position remained unchanged, still a nobody.
In 1990, it was an era of passionate "going south." That year, Li Tuchun went on a business trip to Hangzhou and visited Yue Fei's temple. Looking at the statue of Yue Fei and reading the line "Thirty years of fame and dust, eight thousand miles of clouds and moon" from "The River All Red," he began to doubt his life path completely. "I knelt before the statue of Yue Fei and wept bitterly for more than two hours."
Li Tuchun felt that he should pursue a more abundant life during his prime years, just like the gold rushers who went to Shenzhen. So, as soon as he returned to Hunan, he resigned from his public position, and with 300 yuan and a sack of books, prepared for the worst, he took a train to Shenzhen to create his own "fame and fortune."
**2**
However, the job he found was still his old trade—selling grain and oil.
After arriving in Shenzhen, Li Tuchun was quickly noticed by a grain and oil boss of peasant origin, who sent him around the country to do business. He didn't stay long in this job because he wanted to earn three to five thousand, but the boss only paid him a little over a thousand.
After that, Li Tuchun's luck didn't change. He kept moving between small companies, doing hard work for little pay. Once, on New Year's Eve, he was carrying cement alone. Years later, he described this period as "enduring all kinds of hardships, like a prostitute."
In 1993, coinciding with the centenary of Chairman Mao's birth, the Chairman's Poetry Stele Forest, Shaoshan Martyrs' Cemetery, and the Chairman's Bronze Statue Square were completed one after another.
In his predicament, Li Tuchun came up with a money-making idea: at that time, wall calendars were popular, and 1993 was the 100th anniversary of Chairman Mao's birth, so he decided to produce a batch of commemorative wall calendars of Chairman Mao and sell them in Hunan, the chairman's hometown.
This guy was indeed decisive. He returned to Zhuzhou, mortgaged his family's property certificate to the bank, borrowed 100,000 yuan, and three days later printed 100,000 sets of commemorative calendars for the 100th anniversary of the chairman's birth, then transported them to Shaoshan.
At first, business was mediocre. But on December 26, the day of the bronze statue unveiling, an anomaly appeared on Shaofeng: "Red azaleas within a radius of nine li bloomed overnight, covering the mountains with fiery red." At 10 a.m., the sun and moon appeared simultaneously above the statue.
Li Tuchun sensed that the chairman's calendars would sell like hotcakes, so he immediately raised the price, "from 5 yuan directly to 25 yuan." Sure enough, on the first day, he sold 10,000 copies. During the period around the chairman's birthday that year, Shaoshan attracted an astonishing 2 million tourists, and Li Tuchun became a millionaire overnight.
After getting rich overnight, Li Tuchun felt triumphant. He began to venture into various businesses: opening bookstores, hotels, video halls, and becoming an agent for Playboy magazine. Unfortunately, these projects not only failed to make money but also left him deeply in debt to the bank.
**3**
In 1996, penniless, Li Tuchun went south again to Shenzhen to seek a turnaround.
The turnaround came quickly. One day, he drank a lactic acid bacteria beverage called "Huo Li Bao" (Vitality Treasure). It tasted good, so he contacted the manufacturer to discuss cooperation, hoping to become an agent in Hunan or build a factory together. But the cooperation didn't materialize because he couldn't come up with the funds they required.
After being rejected, Li Tuchun didn't give up. At that time, French Danone had taken a large stake in Wahaha, which made him think the beverage industry was a gold mine, and he had to get in no matter what. After that, he changed his approach: instead of negotiating with the manufacturer, he directly tried to poach the technical director who held the formula for "Huo Li Bao."
Initially, the technical director didn't want to switch jobs, so Li Tuchun spread rumors to the boss of "Huo Li Bao" that the technical director had already signed with him, forcing the director to jump ship. With the formula in hand, he still needed capital. After returning to Hunan, Li Tuchun went to the bank where he owed money and told them that either they continue to invest and let him open a factory to repay the debt, or they could wait for the original loan to become bad debt. The bank manager thought it over and had no choice but to accept.
**In September of the same year, Li Tuchun established Zhuzhou Sunrise Jiangnan Industrial Group (later renamed Hunan Prince Milk Biotechnology Co., Ltd., referred to as "Prince Milk") in his hometown** and began producing lactic acid bacteria beverages. He gave this beverage a very grand name—**"Sunrise Brand" Prince Milk**.
Like Zong Qinghou when he first started, Li Tuchun initially learned from Boss Zong, pushing a cart and hawking on the streets. But his eloquence was no match for Boss Zong's, so naturally, he sold only a few bottles in a month. So in early 1997, Li Tuchun decided to target restaurants.
At that time, the master chef from the dumpling restaurant had already opened more than ten branches in Zhuzhou. As soon as he heard that his little apprentice was making yogurt drinks, he immediately took 200 boxes.
After meals, the master chef gave each customer a free bottle of Prince Milk. After just half a month of this, customers with children were lining up at the door, "specifically asking for Prince Milk."
Soon, major restaurants in Zhuzhou came to Li Tuchun for supplies. That year, Prince Milk's sales exceeded 10 million yuan, and by **November 1997, sales had reached 30 million yuan.**
Victory made Li Tuchun extremely excited, and he reinvested the returns into expanding production.
**4**
Li Tuchun was not satisfied with just being a famous enterprise in Hunan; he wanted Prince Milk to gain national influence quickly, so he set his sights on the CCTV "bid king" (top bidder for prime advertising slots).
At the end of 1997, Li Tuchun was determined to push Prince Milk into the national market, and the most direct way was **advertising**.
So, Li Tuchun made up his mind and rushed to Beijing's Media Center, "to compete with big companies with annual sales of billions, vying for CCTV prime-time advertising slots."
At that time, although Prince Milk had achieved a certain scale, Li Tuchun had no spare money; he even owed workers several months' wages. However, this did not affect his ambition to participate in the bidding. He used **20,000 yuan borrowed to buy a ticket to the "bid king" conference.**
Despite being his first time attending such a grand event, Li Tuchun displayed an air of arrogance. At the bidding site, while others increased bids by 100,000 yuan at a time, Li Tuchun would raise by 500,000 yuan at once. In the end, the unknown Prince Milk won the CCTV bid king with a price of **88.88 million yuan**.
However, just after the bidding in Beijing ended, the financial director in Zhuzhou called immediately: "The company's total assets are not even that much." Li Tuchun said in a booming voice, "Only with the conviction of death can we survive."
Sure enough, as soon as Li Tuchun returned to Zhuzhou, he became a guest of honor at the municipal government, and then four or five banks were chasing after him to offer loans.
CCTV was CCTV. After the 5-second Prince Milk ad aired after the news broadcast, Li Tuchun's mobile phone never stopped ringing, one call after another, until 1:30 in the morning. **In January 1998 alone, Li Tuchun received orders worth 100 million yuan.**
From February onwards, trucks waiting to pick up goods at the Zhuzhou Prince Milk factory formed a queue three kilometers long, "with a wait of at least half a month to a month to get goods."
At that time, Prince Milk had only one production line with an annual output of 5 million yuan. Li Tuchun regretted deeply, "I should have borrowed several hundred million more from the bank and built three production lines."
To quickly expand the dealer network, Li Tuchun also introduced a "zero-risk operation" dealer policy. The policy stipulated that dealers could terminate the cooperation at any time and could return expired products during the cooperation period for new ones. Naturally, such a policy drove dealers crazy. By 2007, more than 7,000 dealers had joined the Prince Milk marketing system.
While developing the marketing system, in addition to Zhuzhou, Hunan, Li Tuchun also invested heavily in four new production bases in Miyun, Beijing; Huanggang, Hubei; Kunshan, Jiangsu; and Chengdu, Sichuan, forming a national layout covering east, west, north, south, and center.
With this combination of strategies, Prince Milk's performance soared. **From 2001 to 2007, its annual revenue skyrocketed from 50 million yuan to nearly 2 billion yuan, and its market share climbed to 76.2%, making it the undisputed leader in the lactic acid bacteria industry.**
Li Tuchun finally became the leader, and he enjoyed the feeling. At that time, he was one of the most frequently appearing entrepreneurs, surrounded by crowds wherever he went, and his speeches were astonishing.
**In 2005, Li Tuchun proposed in a booklet titled "Millennium Vision" to make Prince Milk a "millennium enterprise" that would last forever.**
**5**
Just as Li Tuchun was dreaming of a millennium, a deep financial crisis quietly descended.
In early 2007, Prince Milk was expanding rapidly. To achieve "listing in the U.S." and "striving for the Fortune Global 500," Li Tuchun began to introduce investments of $73 million from institutions such as Actis, Morgan Stanley, and Goldman Sachs. At the same time, Citibank led a consortium of six foreign banks, including ABN AMRO, to provide a credit line of 500 million yuan to Prince Milk. Li Tuchun signed a **betting agreement** with the three major investment banks:
  * If Prince Milk Group's performance grew by 50% in the first three years after the investment, the investors' equity could be reduced;
  * If the performance growth of 30% was not achieved, Li Tuchun would lose control of the company.
After obtaining the financing, Li Tuchun continued to operate according to the established model, pushing Prince Milk's sales scale to its peak. Li Tuchun boasted: "Prince Milk will surpass Bright Dairy within one year, and Yili and Mengniu within three years." While bragging, he also held a grand 10th anniversary celebration, inviting political and business celebrities. On that day alone, 2 million yuan was spent on fireworks.
Li Tuchun's idea was **to escape the crisis through continuous rapid expansion**. Because of heavy spending, Prince Milk's financial situation never improved. By mid-2007, Prince Milk began to control basic office expenses, and by the second half of the year, the Zhuzhou company couldn't even get office supplies on credit.
Li Tuchun continued to find money. In addition to looking for it himself, he also mobilized employees to find money and gave heavy rewards to those who could bring in funds. In the middle of the year, Prince Milk obtained large loans from domestic banks such as Agricultural Bank of China, China Merchants Bank, China Construction Bank, and Bank of China. In September, it obtained a 500 million yuan low-interest joint credit from six international financial groups, including Citibank and DBS Bank of Singapore.
But even so, Prince Milk's financial situation did not improve. The newly obtained funds were mainly invested in rapidly expanding production scale, so the whole company had to tighten its belt. Li Tuchun's family finances also suffered, with their family properties overdue on repayments more than 60 times by the end of the year.
**In this situation, the only way to let everyone out of the trap was to go public.** In fact, shortly after obtaining the Citibank loan, Li Tuchun began to describe the grand blueprint of Prince Milk's listing through the media, and in March 2008, he started related work.
However, before the listing work could unfold, Prince Milk encountered a new crisis.
In September, the Chinese dairy industry was hit by the "melamine incident." Although tests showed that Prince Milk had never used melamine, its sales dropped sharply after the incident was exposed. Reports said that some factories experienced shutdowns and layoffs, and the Kunshan production base under construction became a half-finished project.
Misfortunes never come alone. Almost at the same time, Lehman Brothers collapsed, and the financial crisis broke out. Citibank had already suffered losses of nearly $10 billion in the fourth quarter of 2007.
In October of the same year, Citibank demanded early repayment of the loan from Prince Milk. Li Tuchun repaid part of the loan and interest at that time. Then Citibank suddenly sued Prince Milk in Beijing, demanding early repayment of all loans.
In November 2008, Prince Milk, pressed by Citibank, fell into a debt crisis. Actis, Morgan Stanley, and Goldman Sachs signed an agreement with Prince Milk, promising to inject an additional 450 million yuan in exchange for Li Tuchun handing over his 61.6% stake in Prince Milk. **Li Tuchun thus lost control of Prince Milk.**
**6**
At this point, Li Tuchun was at the end of his rope. He wrote letters to the leaders of Hunan Province and Zhuzhou City, asking for help, admitting his "decision-making errors, overly rapid expansion, poor management, and improper employment."
Facing the crisis of the once-glorious local national brand, the Zhuzhou municipal government was forced to step in under pressure, and the state-owned High-tech Dairy was urgently entrusted to take over Prince Milk.
"Prince Milk must be saved, can be saved, and will be saved!" With such bold words, Wen Dibo, the general manager of High-tech Dairy, took office.
Before the establishment of High-tech Dairy, Wen Dibo had been the chairman of High-tech Group, and also served as deputy director of the Management Committee of Zhuzhou High-tech Zone, member of the Tianyuan District Party Committee, and member of the Party Group of the District People's Government. Locally, he had considerable political resources and a notable reputation.
After taking office, Wen Dibo launched a series of actions. First, he joined forces with the investment banks to push Li Tuchun out and take control of the company's operations. Second, he set up two private companies in Beijing and Hunan, and had Prince Milk sign "advertising contracts" worth 11.5 million yuan and 1.15 million yuan respectively with these two companies, but in fact, these two companies hardly placed any advertisements. Finally, in January 2010, he used special means to turn High-tech Dairy into a private enterprise with 60% private ownership, and transferred the Prince Milk trademark to High-tech Dairy. At this point, Wen Dibo's ambition to swallow Prince Milk was clear.
This state-owned enterprise manager, blinded by greed, was a dreamer. Not only could he not alleviate Prince Milk's predicament, but he made the situation worse. Before Li Tuchun was ousted, Prince Milk's annual revenue was 1.68 billion yuan. By the second year, the revenue for the first nine months was only 500 million yuan.
The poor performance made Prince Milk's dealers very worried. In April 2008, Li Tuchun, still in office, asked dealers to pay a "goods deposit" to Prince Milk to ensure that year's sales, amounting to 10% to 30% of the annual total sales.
Wen Dibo's mismanagement made these dealers see no future and doubt whether they could get their money back. At the same time, Prince Milk's executives were also disheartened after being pushed out by Wen Dibo. Subsequently, the radical elements among these two groups gradually came together, hoping that the ousted Li Tuchun would return.
Li Tuchun had been waiting for this moment for a long time. In early 2010, Li Tuchun, who had been shut out of "Prince Milk," invested 60 million yuan in Beijing to establish **Xianshan Dairy**.
"Just like JDB changed its name but still is Wanglaoji, we hoped to create a new company, just like Prince Milk, with the same technical team, the same management team, the same marketing network, all the original team I brought from Prince Milk."
To quickly attract Prince Milk dealers to join, he also announced in mid-April that he would be personally responsible for the 2.1 billion yuan debt of himself and the original Prince Milk, "ensuring that every cent is repaid." After that, Prince Milk dealers flocked to join Xianshan Dairy, raising about 56 million yuan in the name of "goods deposits." In addition, Xianshan Dairy also raised several million yuan from former Prince Milk employees and borrowed 50 to 60 million yuan from usurers. These fundraisings became the reason for Li Tuchun's later arrest.
Facing this sudden change, Wen Dibo was furious. If he allowed Li Tuchun to continue, his plan would be ruined. In his view, the only way to stop this was to arrest Li Tuchun and make Xianshan Dairy collapse.
On June 12, Wen Dibo used his political resources to have Li Tuchun arrested in Beijing on charges of "illegally absorbing public deposits," "suspected misappropriation of funds," and "occupational embezzlement." Two days later, Li Tuchun was held in Zhuzhou Detention Center.
Li Tuchun refused to confess after his arrest. Soon, his close friends and relatives, as well as important former subordinates of Prince Milk, were all required to cooperate with the investigation or were arrested. Among them, his uncle Gao Bowen committed suicide by slashing his wrists during the investigation; his younger brother Li Jiechun was paralyzed for a time; and his eldest sister Li Guanjun suffered facial paralysis and "could not speak for long periods." It was reported that Li Tuchun himself often fainted due to cardiovascular and cerebrovascular diseases.
Such blows made Li Tuchun want to cry but he had no tears, yet he still refused to confess. He felt that if he didn't topple Wen Dibo, he would never have peace. After that, he continuously reported Wen Dibo's corruption to the Hunan Provincial Discipline Inspection Commission through his lawyers.
Corrupt officials like Wen Dibo couldn't withstand investigation. In July 2011, he was placed under investigation by the Hunan Provincial Discipline Inspection Commission, and later sentenced to nine years in prison for bribery and dereliction of duty.
While Wen Dibo was on trial, the Tianyuan District Procuratorate in Zhuzhou determined that the charges against Li Tuchun were not established and decided not to prosecute him. In January 2012, Li Tuchun walked out of the detention center after being held for 15 months. According to statistics, **he was the first famous private entrepreneur to be acquitted.**
"The general returns to find the tent broken." Facing this dairy empire that once had assets worth billions, Li Tuchun seemed powerless to turn things around.
In August 2011, Xinhuayao and Sanyuan jointly acquired the bankrupt and restructured Prince Milk for 720 million yuan.
**A good enterprise,**
**can be destroyed by the conflict between capital and its founder...**
**Success requires doing many things right,**
**while failure only requires doing one thing wrong!**
-END-


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