Engaging with a leading Chinese dairy producer on better governance and operations, supporting an improvement in its milk quality and ability to capture growth opportunities in new markets.
Following concerns about the quality of milk produced by Chinese domestic dairy companies when several infants died and many thousands fell ill with suspected melamine poisoning in 2008, shares one of China’s major milk producers, more than halved in value and were suspended from trading. Following a change in senior management and the appointment of staff with international experience in dairy production and distribution, we identified improvements in quality control throughout the company’s production process and its supply chain. These changes coincided with improving regulations addressing public concerns about food safety in China and rising milk consumption. In our opinion, it was only a matter of time before this was recognised by the stock market, and we invested in the company in early 2012.