--- title: "Prince Milk Founder Li Tuchun: I Want to Revive Prince Milk" description: "After five years of silence, Li Tuchun, founder of Prince Milk, is speaking out again, seeking to restore his equity, reclaim the '1815 line assets', and recover the 'Prince Milk' trademark. Despite his efforts, the brand's market position has weakened significantly, and its revival seems unlikely." author: "侯隽" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2017-10-15" language: "en" canonical: "https://xinjignxiao.com/en/articles/prince-milk-founder-li-tuchun-i-want-to-revive-prince-milk-2c19492b/" markdown: "https://xinjignxiao.com/en/articles/prince-milk-founder-li-tuchun-i-want-to-revive-prince-milk-2c19492b.md" original_source: "https://mp.weixin.qq.com/s/UZt0C8OSsHAOzkEoaEPt4Q" translation: "https://xinjignxiao.com/zh/articles/%E5%A4%AA%E5%AD%90%E5%A5%B6%E5%88%9B%E5%A7%8B%E4%BA%BA%E6%9D%8E%E9%80%94%E7%BA%AF-%E6%88%91%E6%83%B3%E9%87%8D%E6%8C%AF%E5%A4%AA%E5%AD%90%E5%A5%B6-2c19492b.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/prince-milk-founder-li-tuchun-i-want-to-revive-prince-milk-2c19492b/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # Prince Milk Founder Li Tuchun: I Want to Revive Prince Milk > After five years of silence, Li Tuchun, founder of Prince Milk, is speaking out again, seeking to restore his equity, reclaim the '1815 line assets', and recover the 'Prince Milk' trademark. Despite his efforts, the brand's market position has weakened significantly, and its revival seems unlikely. New Distribution Seeking to restore his equity, reclaim the '1815 line assets', and recover the 'Prince Milk' series trademarks... After five years in obscurity, why is Li Tuchun suddenly appearing and speaking out? What has he been doing for the past five years? Does Prince Milk, once popular nationwide, still have a chance to make a comeback? The Five Silent Years Ten years have passed. Li Tuchun, now 57, looks younger than his age with recently dyed black hair. He speaks cautiously and politely, but whenever 'Prince Milk' is mentioned, he becomes restless and tries hard to control his emotions. In January 2012, after being detained for 15 months on suspicion of illegally absorbing public deposits, Li Tuchun was released after prosecutors decided not to press charges. Since then, he has embarked on a difficult path. 'When I regained my freedom, my health was already poor, with various ailments. So in recent years, I have been recuperating from the illnesses I contracted in prison while also campaigning for justice for Prince Milk.' He told reporters that in April 2012, the bankruptcy administrator of Prince Milk signed a memorandum with him. Both parties agreed to resolve Li Tuchun's claims against the three Prince Milk companies in Zhuzhou in accordance with the law, within the scope of the funds reserved in the restructuring plan and without increasing the costs of bankruptcy restructuring. 'At that time, I also raised the need to resolve debt issues, including the ownership of the '1815 line assets'. But over these five years, my demands have not been concluded,' Li Tuchun said. The Curse of the Bet In the dairy industry, Prince Milk, co-founded by Li Tuchun, gained fame after winning the 1998 CCTV advertising 'bid champion', with peak revenues exceeding 1.8 billion yuan. At the end of 2006, three investment banks—Actis, Goldman Sachs, and Morgan Stanley—jointly invested $30 million in Prince Milk, taking a 31.3% stake and initiating its listing plan. Public information shows that in 2007, Prince Milk's sales revenue exceeded 3 billion yuan, with profits over 500 million yuan, and its market share in China's lactic acid bacteria beverage market once reached 76.2%, making it the undisputed industry leader at the time. Media reports at the time stated that Li Tuchun signed a bet agreement with the three investment banks. The most widely circulated version of the bet agreement was: within the first three years after receiving the $73 million investment from the three banks, if Prince Milk's performance growth exceeded 50%, the investors' equity could be adjusted (reduced); if it failed to achieve 30% growth, Li Tuchun would lose control of the company. Public opinion held that this bet agreement was the trigger for Li Tuchun's eventual complete loss of Prince Milk. After receiving equity investment from the three investment banks, in September 2007, Prince Milk obtained a 500 million yuan three-year unsecured, unguaranteed, low-interest credit loan from six international consortiums including Citibank. Since there was no collateral, Li Tuchun personally bore unlimited joint liability for this loan. From the second half of 2007, rising raw material prices led to a sharp increase in costs and increasingly tight cash flow for Prince Milk. In the same year, the U.S. financial crisis broke out, and Citibank significantly tightened overseas loans, urging borrowers to repay early. In March 2008, Citibank required Prince Milk to increase interest by 30% on top of the original rate; in May, it demanded additional guarantees; and later, it required early repayment. On October 23, 2008, under pressure from the three investment banks, Li Tuchun was forced to sign an 'irrevocable agreement', stipulating that within one month, either Li Tuchun would find a strategic investor to take over the three banks' equity, allowing them to cash out and exit, or the bet agreement would be executed, and Li Tuchun would hand over his equity and completely exit. A month later, Li Tuchun left with nothing. In 2010, Li Tuchun and three other executives were arrested on suspicion of illegally absorbing public deposits, and were not released until January 2012. In November 2011, Beijing Sanyuan Foods Co., Ltd. and the Xinhuayuan Group signed an agreement with the bankruptcy administrator of Prince Milk, investing 715 million yuan to take over Prince Milk's factories, trademarks, patents, and other assets. Beijing Sanyuan held 60% and Xinhuayuan held 40%. 'I did not sign the so-called bet agreement that the outside world believes existed; the bet was with the entire management team, not me personally,' Li Tuchun repeatedly emphasized. According to him, since no equity had been set aside for senior executives at the time, at his suggestion, both parties contributed 5% of equity to share with management—Li Tuchun's side contributed 3.4%, and the PE side contributed 1.6%. If Prince Milk's sales grew by more than 40% in the next three years, management would receive the equity. Li Tuchun therefore explained that the so-called 'bet' was with management, not with him as the major shareholder. Can Prince Milk Be Revived? 'After I was declared innocent, many people sympathized with me, calling me a tragic figure. What pains me most is that things have changed, especially that Prince Milk, which I founded, has been in decline. I want to get the trademark back and revive Prince Milk,' Li Tuchun told China Economic Weekly. He said his current demands include: restoring his original equity, returning the '1815 line assets' to him personally, and returning the 'Prince Milk' series trademarks to his affiliated company Hongshenghuo Company. The so-called '1815 line assets' refer to approximately 132,300 square meters of land located in Jiangu Village, Quchi Township, Lusong District, Zhuzhou. Li Tuchun believes that in 2006, he allocated the '1815 line assets' to non-dairy operations and they did not enter the bankrupt company, but the assets were sold along with Prince Milk to Sanyuan and Xinhuayuan. As for Prince Milk, which Li Tuchun has always been concerned about, its influence seems to have waned. After the major upheaval, Prince Milk's original channels, networks, customer relationships, and supply chain have been fragmented, and Sanyuan Foods' injection cannot fully repair them. In the current context of consumption upgrading, Prince Milk has no possibility of making a comeback. In other words, the era of lactic acid bacteria has passed. Prince Milk now has basically no competitive advantage in this category, and its market has sunk to fifth- and sixth-tier cities and even rural areas. Even if Li Tuchun returns to Prince Milk, the likelihood of reversing its decline is slim. It is reported that in the low-temperature lactic acid bacteria beverage market, Yakult and Wei Chuan already occupy nearly half of the market share. In the fermented lactic acid bacteria beverage market where Prince Milk started, there are also large enterprise brands such as Wahaha, Want Want, and COFCO. The market space left for Prince Milk has already narrowed significantly, and with its original channels destroyed, it will be very difficult for Prince Milk to regain market share. Clearly, in Li Tuchun's life plan, Prince Milk is no longer the 'protagonist' of his next chapter. Media reports have noted that the land assets Li Tuchun refers to were not registered as separate from the group during the bankruptcy restructuring in 2011, and the 'Prince Milk' series trademarks are not owned by Li Tuchun or his affiliated companies. From this perspective, the possibility of Li Tuchun overturning the Prince Milk bankruptcy case is very small. History has turned a new page. What I want to say is that since Li Tuchun's imprisonment, China's dairy industry has undergone earth-shaking changes. Li Tuchun's case can be said to have transcended the dairy industry itself and will leave an indelible mark in China's business history. It is worth learning from for more Chinese private entrepreneurs. I hope the relevant authorities will handle it prudently and give history a reasonable explanation. The 2017 (Third) FMCG + Internet Conference will be held in Chongqing in November 2017. 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