An Exclusive Interview with Chen Yuanrong: “Sheep Kingdom” Practitioner

On 14 Nov, the world’s renowned accounting firm Deloitte announced Blue River Dairy as one of the Fast 50 growing companies. Blue River Dairy was honored “Fastest Growing Exporter”, “Fastest Growing Agribusiness”, “4th Fastest Growing Company Overall”.

Blue River Dairy occupies the sheep milk market in a rather short time and writes down its own romance in dairy industry of China and the world at large would not be made without a man behind—the founder Chen Yuanrong.

How Chen Yuanrong builds his “sheep milk kingdom” from scratch?

“Experience”—He has been in the dairy business for over 40 years. As a seventeen-year-old he volunteered to respond to the initiative of Educated Urban Youth Go Mountain and Countryside policy for life and work. He was sent to Nanshan Ranch for grass growing and cow feeding and managing production plant and sales team later on. He then led two companies to go public, namely Yahua Dairy and Ausnutria Dairy.

“Wisdom”— In 2014, while his business visit to New Zealand he happened to read a research report on nutrition value of the sheep milk. Thanks to years of experiences he keenly sensed the invisible industry value and commercial chances behind. By spending out his 40 years savings he bought up two sheep milk factories in New Zealand and Italy. With combined sheep milk resources in New Zealand and Italy Blue River Dairy controls 70% of seep whey protein as raw material globally.

 “Practice”—In 2017, the country enacted a formula registration mechanism policy and entered into a one-year long policy transition period, from which he saw the chances to make breakthroughs on new category and build full covered categories. In September 30, 2017, Blue River Dairy had its full category products passed the formula registration and became the pioneer company in the industry. In 2018, he saw opportunities from new retail selling and built up the maternal and infant vertical service platform named “妈妈有惊喜” after more than one year’s unremitting hard works. He invests massively in technology innovation to build an enterprise dynamic competition rampart.

From 2008 to 2018, the sheep and goat powder milk market share in China grows from 300-500 million yuan to 6-7 billion yuan and expecting to grow to10 billion yuan by the year of 2020. The sheep milk is becoming more popular in the country and the market scale is growing exponentially year by year. 

In the last two years, Blue River Dairy’s overall business grew by 938%, while export business grew by 1058% at the same period. This company’s growth speed stands out in the industry.

To the fact that “Blue River Speed” becomes a dairy legend, how did Chen Yuanrong lead Blue River Dairy to find its own possession in dairy industry?

What it takes for him as an educated urban youth under China Urban Youth Go Mountain and Countryside policy to be the presently founder of Blue River Dairy? What kind of future that Blue River lies on?

With these questions in mind our journalist comes to the head office of Blue Rive Dairy for a face to face interview with Chen Yuanrong. The interview takes over 3 hours.

    Success decoding: experiences, wisdom and practices enable you to truly discover value, seize opportunities and create values.

Journalist: During the ten years’ recession of China’s dairy industry, how you lead Blue River Dairy discovering the big sheep milk market and why do you choose to acquire Blue River Dairy LP in New Zealand?

Chen Yuanrong: In 2014, when I was on business visit in New Zealand after I left Ausnutria, I read a research report on nutrition value of sheep milk co-worked by Auckland University and New Zealand Ministry for Primary Industries. Because of more than 40 years experiences in dairy industry I found the huge potential industrial value and business opportunities in the segmentation of sheep milk. 

New Zealand is called “the country of sheep” because it has more sheep than cows and more cows than people. However, for a very long time the sheep in this country produces only wool and mutton but not milk. The research shows that the water consumption and grass consumption of 100 milk sheep equal to 1 milk cow, while the former creates way more economic value than the latter. Compare to cow milk, sheep milk is more economic and environment friendly. Sheep milk industrialization and commercialization have long been primary industry focus for New Zealand government support. New Zealand Ministry of Business, Innovation and Employment invests 6 million dollars every year on “Promote Export of New Zealand Sheep Milk Industry” and create research programs on sheep industry covering grass growing, sheep and goat feeding and sheep milk nutrition and clinical researches, etc.

I was much more convinced then as I’d made the right choice and decided to build my own industry strengths around globe and introduce sheep milk industry from abroad to China to promote the industry upgradation of China’s infant formula milk powder. We aim to be not only “the only sheep milk enterprise in New Zealand” but also the creator of sheep milk commercialization around the globe.

In 2014, I acquired New Zealand Blue River Dairy. In fact, at the beginning while the founder of BRD, Keith was not quite interested in our cooperation until I thoroughly analyzed the strengths and risks of the industry and gradually gained his acceptance. In the end, Blue River Dairy stands out from four other state owned competitive tender enterprises through twists and turns and fully acquired New Zealand Blue River Dairy LP with 200 million RMB and started introducing emerging sheep industry from New Zealand to China.

Journalist: Blue River Dairy ceaselessly strives for going global. How BRD maps out its big picture of international development and possesses sheep milk market step by step? During the phase of internationalized production, by what means to tackle problems of management arising from varied philosophies.

Chen Yuanrong: Europeans call the sheep milk as “God’s bliss”. Word has it that they called sheep milk as “another white gold”. The nutrition function indicators of sheep milk are far higher than any other mass operation capable dairy categories. It is truly a natural dairy product that is the closest to breast milk and it is becoming a niche product of infant formula milk powder in Europe and America.

Infant formula Yang milk powder market development relies on upstream resource development. In October 2016, we acquired Alimenta S.r.l, the biggest sheep milk ingredient supplier in Italy. Located in Sardinia, Alimenta is the only milk powder plant on the island, possessing unique premium quality sheep milk resources in Sardinia.

By investing in new equipment and introducing advanced processing technology after the merger, we successfully produced the world’s first Yang D90. It breaks new ground in Yang D90 production and achieves whole industrial chain operation from fresh milk, whey liquid control, final products manufacturing to brand marketing. In this way, we have gained a strong competitive edge and greatly improved production efficiency.

2018 has witnessed a rapid growth in Blue River’s sheep milk capacity demand. In order to satisfy fast-growing consumer demand in China’s market and guarantee the supply, we decided to implement 24-hour 3 shifts in the New Zealand plant.

When the news was announced, the New Zealand local employees, who value rest and family, and the local labor union raised their doubt. When the problems arise, we need to solve them. To wipe out the employees’ worries and carry out management system revolution in an efficient manner, we held talks with employee representatives and the local labor union, and conveyed our bonafide and full respect. After several rounds of communication, we proposed incentive policies including wage improvement. Eventually this July, 3 shifts were put into force in New Zealand, which is a groundbreaking initiative in the country’s history.    

Journalist: With products and resources, how will Blue River gain more recognition in the market? How will Blue River enhance its leading position in sheep milk resources? What kind of future will you bring Blue River to?

Chen Yuanrong: First of all, Blue River’s Yang resource control plan hasn’t stopped in Sardinia, but continued integrating upstream resources in other European countries and extending the map of Yang milk resources to other Mediterranean countries like Greece and Spain. By virtue of capital and technology, we have commercialized more industrial resources, thus consolidating Blue River’s leading position in Yang milk resources in the globe.  

In terms of service mode, Blue River is gathering power from new retail model. After one year of in-depth market research, Blue River has successfully developed a maternal and infant vertical service platform named “妈妈有惊喜” which serves offline distributors, stores and customers. It offers more services to customers, stores and offline distributors and more possibilities for stores and customers.

The platform with “contents” and “community” functions encourages users to share and discuss after purchase and gradually forms a basic portrait of each user. So the platform can work out more accurate personalized purchase recommendations. This is conducive to increasing the repurchase rate of store customers. Meanwhile, the platform data can be “grafted” to the offline, in other words data can be shared between online and offline. It helps improve stores’ service capability and profitability. The platform users are not only consumers, but also content disseminators, which gives the platform more possibilities to reach and convert potential users. The more traffic the APP platform gains, the more resources will be gathered and higher added values will be produced. On the one hand, it can promote Blue River brand’s retail upgrading; on the other hand, it can help stores “plough” deep the regional market, improve customer stickiness and resolve the problem that “new customers are lost, old ones can’t stay”.       

The launch of “妈妈有惊喜” the maternal and infant vertical service platform will allow Blue River’s full category development potential power to be fully displayed, and lead Blue River and its cooperative stores to a brand-new stage. Blue River’s full category supply chain advantage of milk products from three species, sheep, goats and cows has the genetic advantage of attracting customers for stores. The combination of the full category products and maternal and infant vertical service platform is a pioneering initiative for brand owners and distributors, which allows brand owners and distributors share long term win-win results and improve distributors and stores service and marketing capabilities. 

As early as in 2016, Blue River launched the strategic goal of 5 billion RMB in the 5^th year. I believe that we can make it for the logic that we have a good grasp of the market and China’s regulations and policies. With the new policy put into force, what will the industry give us? One is opportunity, the other is market.    

In 2017 when the formula registration policy was proposed, I made a pre-judgment on the infant formula market trend after the new policy: firstly, full category supply chain resources determine whether the brand can become bigger and stronger; secondly, with consumption upgrading, the industrial development of infant formula witnesses changes taking place from one category i.e. cow milk competition to binary categories i.e. cow and Yang milk competition. Category competition will become the next major battlefield. Given that nutritional composition of sheep, goat and cow milk is distinct from each other, the infant formulas with milk respectively from these three species own obvious differences. Therefore, Blue River obtained 3 series of 9 infant formulas in the formula registration. Facts prove that strategic deployment in advance makes Blue River the first and the only company that gets the full category infant formulas passed the registration.    

At present, our company will enhance its leading position in the global Yang milk resources by investing huge sums of money each year to establish company dynamic competitive barriers form technology, resources and production efficiency.

Since 2004, “experience”, “wisdom” and “practice” are indispensable in Blue River Dairy’s development history. Only when combining them, can we truly discover values, seize opportunities and create values.

The rich experience accumulated by Blue River Dairy during long time period has provided a reliable reference for the company’s development and development of scientific wisdom has further promoted the effective promotion of products. As the owner of core Yang milk resources (Yang D90) in the world, Blue River, Sheep Milk Kingdom, under the leadership of Mr. Chen Yuanrong, will always continue developing high-end Yang milk products, make best use of its industrialized resources, differentiated formulas, cost advantage and maternal and infant vertical service platform, and stand in the forest of the global dairy brands. 

 (The end)