Mengniu Group currently processes the majority of its products at its 11 production bases. Based on its production capacity as of 31 December 2004, it is able to produce approximately 2 million tons of dairy products annually.

According to China General Chamber of Commerce and China National Commerce Information Center joint survey of large retailers, Mengniu Group was the top liquid milk producer in China by sales volume in 2004. In addition, according to an ACNielsen survey conducted in 24 of China's 31 provinces, autonomous regions and directly administered municipalities, for the month of December 2004, Mengniu Group held the leading market share in the liquid milk market of 22.0% by volume, excluding yogurt and milk beverages sales.

Mengniu Group is also the exclusive provider of dairy products to Chinese cosmonauts and athletes of the State Sports Administration Training Bureau.

Mengniu Group's success to date and its potential for future growth can be attributed to its following competitive strengths:

	Highly experienced and incentivized management with proven ability to deliver strong performance
	Strong brand name recognition and leading market position combined with effective sales and distribution network
	Ability to obtain a steady supply of high quality raw milk
	Strong market-oriented research and development capabilities
	Stringent quality control standards
	World class production facilities