Once bankrupt dairy farm churns out profits

Before she assumed control of a bankrupt State-owned dairy farm, Wang Jin worked as an accountant at a glass manufacturer in Huaibei city in the eastern province of Anhui.

In addition to all the farm's debts and poor management systems, she inherited 93 employees. Although they were skeptical at first, most of the original members of staff have witnessed how the company has become one of the largest dairy producers in the province, with sales revenue of more than 600 million yuan ($91 million) last year.

In the early 2000s, dozens of State-owned dairy farms in the province were sold to private businesses. Wang's older brother, who was born in Huaibei, was noted running a profitable engineering company in Beijing, so the Huaibei government asked him to take over the farm.

Although he paid more than 4 million yuan to acquire the farm's fixed assets, excluding the cattle, Wang's brother had no interest in running it so he left the business entirely in her hands.

The Wangs pay 150,000 yuan a year to rent the farm's 134-strong dairy herd, and yields have increased greatly compared with the days when each cow produced just 2 metric tons of milk annually as a result of poor management.

On Jan 1, 2003, Wang, who was then age 31, formally become general manager of the company, called the Huaibei Xiqiang Dairy Group, which is a subsidiary of her brother's company.

She has tried a number of ways to expand, including buying animals from other parts of the province and offering interest-free loans to local farmers, which means they can repay the cash with milk.

By the end of last year, Xiqiang, headquartered in the city's Xiangshan district, had expanded its herd to more than 5,000, and each cow now produces more than 8 tons of milk annually.

"Many people thought it was much better to work for a State-owned company than a private one, even though they were paid less than 300 yuan a month," Wang said.

Some of the employees objected to having a female boss, and three quit because they didn't want to work for a private company. However, the remainder chose to wait and see how things developed. Wang quickly raised their salaries to an average of 700 yuan a month, and 78 of them are still working for Xiqiang, which has 840 employees.

In Wang's first year in control, the company achieved sales revenue of more than 6.7 million yuan. "The employees considered it a great success," she said.

Lacking management experience, Wang said she made many decisions based on what her conscience told her to do. She has made March her annual "Month of Product Quality" to remind the employees of an incident that occurred on March 9, 2004.

"About 200 kilograms of tap water was accidentally pumped into 4,700 kilograms of fresh milk," she said.

Although the workers thought the mistake would hardly affect the quality of the milk, Wang gathered them together and made them watch as she poured the milk into a sewer. "They were shocked at my response and thought it was a great pity to waste the milk", she said.

Thanks to Wang's emphasis on quality, Xiqiang not only survived but thrived after a scandal in 2008, when thousands of infants fell sick after ingesting melamine-tainted infant formula made by Sanlu Group, based in Shijiazhuang, a city in Hebei province.

Some companies in Anhui were closed as a result of poor product quality, while others were unable to overcome plummeting sales that resulted from panic on the markets. Just eight of the 38 dairy producers in the province survived.

"As the scandal quickly swept across the country, officials from the food security authorities arrived one day and suspended production for an on-the-spot inspection," Wang recalled.

The company's milk was confirmed melamine-free, and to illustrate their confidence in the product's quality, some of Huaibei's top officials drank it on television.