Corporation Strategy

China Dairy Co., Ltd. is striving for achieving excellence for its farms, providing quality products to its cooperation partners and delivering value to its stakeholders through its unique business model.

Through the cooperation with local farmers, the company produces fresh and raw milk for its customers.As of March 2018, the Company totally had about 31,000 dairy cows, of which nearly 29,000 cows were entrusted to local farmers to assist with producing fresh and raw milk. China Dairy supports the local farmers by providing them with a fee based on the number of calves, bred cows, young cows,and adult cows and on the feeding costs. In return, the farmers are required to feed the cows every day and breed the cows commissioned by the Company in batches. All fresh and raw milk produced by cows, as well as any calves and any fertilizers produced are still the properties of China Dairy Corporation Limited. The dairy manure is used to produce organic fertilizers. The Company’s total production capacity of cows is nearly 800 tons per day.

China Dairy launched a new business model in 2011 to sell cows to external farmers and generate income from raw milk produced by these cows raised by farmers. The farmers purchase cows with repayment period being 1-8 years. During the repayment period, the Company arranges to sell the fresh and raw milk to customers. In exchange, China Dairy is entitled to a 20%-30% milk sale commission on the milk sold. Under this model, as of March 2018, China Dairy currently worked with about 40 farmers and its aggregate milk production capacity was approximately 300 tons of raw milk per day.

The Company will, on the basis of the existing model, implement a firm and robust development strategy, expand its existing business, maintain the increase of company's revenue and net profit by optimizing the cow population(breed and age structure) and expanding the number of cows with commission discount.

At the same time, the company will expand the Company's influence and coverage in the Northeast through mergers and acquisitions, cross-shareholding, etc., to expand the Company's influence and market share in China.