Miaokelanduo founder Chai Xiu resigns from all posts, Mengniu accelerates cheese business integration

By 21st Century Business Herald Reporter He Hongyuan

At the operational level, Milkground founder Chai Xiu has fully departed from the company she founded.

Recently, Milkground announced that its board of directors had received a resignation letter from Chai Xiu. Following her resignation, Chai Xiu will no longer hold any position at Milkground or its subsidiaries. Previously, Chai Xiu held a seat on the Milkground board.

It is important to note that Chai Xiu remains the second-largest shareholder of Milkground, with a stake of 16.01%. However, nearly all of her shares are pledged as collateral.

In comparison, Mengniu holds a 37.77% stake in Milkground, solidifying its position as the controlling shareholder.

A Corporate Governance Shift

Essentially, Chai Xiu's exit is a matter of corporate governance. The Milkground board has lost a dissenting voice in Chai Xiu.

Going forward, Mengniu's integration of Milkground is expected to accelerate.

Objectively, tensions between Chai Xiu and Milkground's current management had been growing increasingly acute.

On January 25 of this year, Milkground announced that Chai Xiu had been removed from her roles as Vice Chairman, General Manager, and legal representative, retaining only her position as a director. Around the same time, Kuai Yulong, a Mengniu-affiliated executive, was appointed General Manager.

The Dispute: Guarantees and Compensation

On the surface, the conflict between the two sides centers on a guarantee dispute related to an aged investment and subsequent breach of compensation commitments.

According to a January announcement, Milkground had previously held a stake in Shanghai Xiangmin Equity Investment Fund, which provided a guarantee for the debts of related party Jilin Yaohe. However, Jilin Yaohe failed to repay its debt to Mengniu on time, leading to a default and preventing the fund from completing its liquidation within the agreed timeframe.

Chai Xiu had previously issued a written commitment to fully compensate Milkground for any direct or indirect losses arising from the aforementioned guarantee. However, despite repeated demands from Milkground, Chai Xiu had not fulfilled this compensation commitment nor provided a clear solution as of the date of the announcement.

However, according to information obtained by the 21st Century Business Herald reporter, the two sides also had differences in business operations.

In fact, since Mengniu took control, Chai Xiu had been gradually stepping back from Milkground's decision-making core. At the same time, her management strategies had sparked some controversy within the company. The pledging of her shares due to personal cash flow pressures further accelerated her marginalization.

For Milkground's management, leveraging the related disputes to remove Chai Xiu from the General Manager position was a logical step.

A New Strategic Direction

Indeed, after Chai Xiu stepped down as General Manager, Milkground entered a new phase.

In March, Milkground's new management proposed the "13434" cheese ecosystem strategy. This strategy anchors on one core goal of exceeding RMB 10 billion in revenue and doubling net profit. It focuses on three major categories: cheese, milk fat, and whey. It targets four key consumer groups: children and adolescents, family dining, fitness enthusiasts, and the elderly and special populations. It leverages three growth engines: B2B, B2C, and M&A/overseas expansion. Finally, it builds four underlying support capabilities: product innovation, brand leadership, channel transformation, and digital intelligence empowerment.

However, Chai Xiu, now in a secondary role, appeared unwilling to remain quiet.

In August, when Milkground released its semi-annual report, Chai Xiu, as a director, cast a dissenting vote, with her objection centered on the aforementioned disputes.

Earlier, in April, when the Milkground board reviewed the "Proposal on the 2026 Compensation Plan for Senior Management," Chai Xiu also voted against it. Her stated reasons were "objections to the compensation structure of certain executives and objections to the attendance records and compensation standards of certain executives," directly targeting Mengniu-affiliated management.

For Milkground, Chai Xiu's presence on the board may have represented a risk.

Meanwhile, Chai Xiu, under financial pressure, found herself in a passive position at Milkground. According to the 2025 annual report, Milkground decided not to pay Chai Xiu her target bonus for that year. Milkground also stated that non-independent directors not employed by the company would not receive compensation.

To some extent, Chai Xiu's departure from the board represents a relatively "dignified" resolution for both parties.

Strategic Importance for Mengniu

It is also crucial to recognize that Milkground currently holds strategic significance for Mengniu.

As the liquid milk market contracts, deep processing of dairy products is becoming a major transformation direction for the entire industry. A senior executive from Feihe emphasized that the future Feihe, building on its infant formula base, positions itself as a protein technology company.

Market demand also exists.

Global prices for dairy protein raw materials continue to rise, especially for high-purity whey protein, which remains in a sharp upward trend. According to China Customs statistics, from January to July 2026, China imported 381,400 tons of whey, a year-on-year decrease of 7.0%. However, the average import price reached USD 1,462 per ton, a year-on-year increase of 16.6%. In July alone, the average price further climbed to USD 1,767 per ton, a year-on-year surge of 33.4%.

Mengniu President Gao Fei noted that, given the overall ample domestic milk supply and the high external dependence on core raw materials like whey, the industry must fully leverage the scale and cost advantages of the supply chain, deeply apply digital intelligence technology, and concentrate efforts on tackling key raw materials such as whey, milk fat, and cheese.

It is important to note that obtaining whey protein first requires processing large quantities of casein.

Experts from Tetra Pak China explain that milk contains approximately 3% protein, of which about 80% is casein and the remaining 20% is whey protein.

Currently, there are two main technical routes for extracting whey protein. One is the process route using casein-coagulated products as the main product, which involves producing cheese, casein, caseinates, and other products to obtain whey. The other is the whole-component separation processing method using membrane filtration to separate proteins.

Clearly, as China's largest cheese company, Milkground has a natural advantage in the coagulation route.

In the short term, Milkground can process by-products through basic whey product processing, directly reducing the comprehensive cost of cheese production. In the long term, the company has the industrial foundation to extend into higher value-added categories like whey protein.

This has become key for Mengniu to efficiently enter the protein market.

Recently, Mengniu's sports nutrition brand, Maxine, completed a nearly RMB 100 million Series A+ financing round. The core raw materials for Maxine include whey protein and casein.

To some extent, Milkground and Maxine have formed a closed-loop deep processing system for Mengniu. At a recent performance briefing, Milkground mentioned that, at the current stage, whey-related products are prioritized for internal production use within the Mengniu system.

Risk Clearing and Future Outlook

Overall, Chai Xiu's exit represents a risk-clearing event for Milkground.

Beyond the changes in corporate governance, the risks associated with Chai Xiu's disputes were largely concentrated and released in 2025. The book value of Milkground's non-current financial assets decreased from RMB 210 million at the end of the third quarter of 2025 to RMB 51.608 million at year-end, with a full-year fair value change loss of RMB 160 million.

In the first half of this year, Milkground's revenue increased by 28.71% year-on-year to RMB 3.304 billion. Net profit attributable to the parent company increased by 13.74% year-on-year to RMB 151 million.

Both Mengniu and Milkground are entering a new phase of growth.

(Video editing: Intern Li Yuan)