Going global helps to feed aspirations

But Ge Junjie does so with his eyes wide open to pitfalls

Ge Junjie doesn't drink milk or alcohol. As vice-president of Bright Food Group Co, Ge often needs to convince people how he manages to run a business that he himself doesn't engage in much during his leisure time.

So here is his winning formula: "Because I don't drink them myself, I try my best to sell them."

Ge, 54, joined the Shanghai Tangjiu Group Co Ltd 33 years ago upon graduation with a degree in accountancy. The company, a major manufacturer and distributor of candies and alcohol, became a fully owned subsidiary of Bright Food in 2006, which now ranks as China's second-largest food vendor by revenue.

Bright Food was formed amid a series of mergers and consolidations of State-owned assets. Shanghai municipal government is the company's controlling stakeholder.

Today, the corporation has grown into a huge comprehensive food industry group that covers modern agriculture, food processing and production and food distribution. The group's total assets were valued at 82 billion yuan ($13.2 billion) and its revenue from primary business reached 75 billion yuan last year.

It now holds a 5.7 percent share of China's 174 billion yuan dairy market, ranking it fourth in the domestic market, according to Euromonitor International.

Bright Food accrued a market share of 1.4 percent in terms of packaged foods and 1.6 percent in the ice cream market, said the London-based researcher. Major competitors include domestic counterparts such as Inner Mongolia Mengniu Dairy (Group) Co Ltd and Inner Mongolia Yili Industrial Group Co Ltd, in addition to foreign players such as Nestle SA.

But seven years ago, there was an industry malaise plaguing almost all State-owned enterprises because they operated less efficiently with obsolete business models. Ge decided to reverse this tide by mapping out a global ambition and tuning into international standards.

After taking the helm as a top executive overseeing the company's overseas expansion, Ge sensed a growing demand for imported food, fueled by the burgeoning middle class with an increasing disposable income.

However, beyond the headlines about China's growing global clout, Ge believed that the establishment of world-class domestic companies was lagging behind the overall growth of the economy. This put China at a disadvantage, which led to limited bargaining power at industry-wide talks.

He referred to a visit two decades ago to the headquarters of Nestle, the world's largest food company by revenue. In addition to the various flavors of ice creams he tasted, Ge was most impressed by a poster outside a research and development laboratory.

"How could you let a girl with freckles on her face advertise for you?" Ge asked his French counterpart, puzzled. He was told the advertisement was designed for the Japanese market because girls with freckles were regarded as cute and beautiful in Japanese culture.

It suddenly occurred to Ge that to increase the number of China's equivalents of Nestle, The Coca-Cola Co, McDonald's Corp or Walmart Stores Inc required not only great financial resources but also management experiences in international marketing, high technology, as well as branding skills.

To beef up market vitality, Ge steered the company to make overseas acquisitions. He identified several channels to expand overseas, significantly through mergers and acquisitions.