Ｙｉｌｉ Ｇｒｏｕｐ：Ｌｅａｄｉｎｇ Ｄｉａｒｙ Ｂｒａｎｄ ｉｎ Ｃｈｉｎａ

Inner mongolia Yili Ltd. is one of the lead-ing dairy processing enterprises in China. Thecompany is also one of the top 520 industrialenterprises and the top 151 agricultural enter-prises in China. Yili Ltd. has exclusivity asdairy processor in support of the 2008 Beijing Olympic Games. Inner Mongolia Yili Ltd.Sponsorship of the 2008 Olympic Games， her-alds it as the first ever Chinese foodbrand tobe involved as a sponsor of Olympic Games.

The Yili manufacturing group comprisesa total of five categries: liquid milk， ice cream，milk powder yogurt and raw milk. The com-pany has more than 80 sub-enterprises.

One thousand plus of the Yili brand prod-ucts characterized as Islamic are regarded asGreen Food， by China Green Food Develop-ment Center. Inclusive are ice cream， milkpowder， milk tea powder， UHT milk， yogurtand cheese. Among them， Yili ice cream hasbeen the No.1 in both production and retailsales in China for the past consecutive 10 years;Yili UHT milk， for the past consecutive7years; Yili milk powder and milk tea powder，since the founding of the company， remain inthe top three.

In the first 3 quarters of 2005， the mainbusiness income totals to RMB 9.60 billion，32.27% higher than the same period of lastyear; main business profit， RMB 2.674 billion，33.44% higher than the same period of lastyear; the total profit， RMB 0.391 billion， 16.28% higher than the same period of last year;net profit， RMB 0.25 billion， 20.14% higherthan the same period of last year; and divi-dend per share， RMB 0.64. From 2003 on，the main business income of Yili Ltd. has beenthe highest in China dairy industry， and in2002， was in first place of top 100 bestperfermance enterprises in chinese stockmarket.

By the end of the first half year of 2005，Yili Ltd. was for the third time concecutivelyamong \"The Top 500 Enterprises in China\"and was rated \"The 50 Best Potential PublicCompany of China\"by China Stock Newspa-per and Asia Consulting Company for seventimes consecutively. In 2004， Yili and Halerwere selected as the only two chinese enter-prises for the most popular 10 brands in Chi-nese market. Yili Ltd. was selected twice asNo.1 for \"The 500 Best Valued Brand inChina\" in food processing industry， with thebrand prices of RMB 12.787 billion and RMB13.612 billion respectively.

In March 1996， Yili Ltd. became the firstlisted dairy processing enterprise in China withstock listed in Shang Hai \"A\" stock market.Yili Ltd. stock has been considered as a bluechip stock because of its good perfermanceand high speed development.

As a first， in 1999， \"Yili\" as a brand wasselected as \"the most well-know brand inChina\" by Industry and Commerce Adminis-tration Bureau of China and passed ISO9002 registration among all Chinese food process-ing industry. In random market check imple-mented by dairy products qaulity check centerof China， the qualification rate of Yili Ltd.'sdairy products was 100% for many years. YiliLtd. was granted，\" enterprises Chinese con-sumers satisfied\"， as issued by Quality Con-trol Management Association of China; also\"quality-benefit oriented enterprises\" by FoodIndustry Association of China. In Sept. 2000，Yili Ltd. was selected as\" excellent enterprisesfor quality control management in China \"theState Bureau of Quality and TechnicalSupervision.

In 2000， Yili Ltd. pure milk was issued，Quality Security National StandardCertificate. As a first， in the same year， YiliLtd. Liquid Milk business category passed HACCP registration， thus becoming the firstdairy processing enterprise in China to imposeeffective quality control on food security. Inearly 2003， Yili Ltd. cream business category，milk powder business category and raw milkbusiness category passed the audit and certi-fication by the third part too thus， setting a goodexample for the food processing industry inChina. In Dec. 2003， Yili Ltd. passedISO14001 environment administrationregistration， which is considered as the， \"Passof Green Barrier\". It symbolized that Yili Ltd.had successfully gained the \"green pass\" tosell products to international markets. It alsolaid a solid foundation for Yili Ltd. to enterinto the top 20 of the world dairy industry.

In Aug. 2002， seven share-holding com-panies were ratified by China's Securities Regu-latory Commission to increase issues in stock，as one of them， Yili Ltd. issued nearly 5 million\"A\" stocks， raised RMB 0.8 billion， which pro-vided capital guarantee for enlarging produc-tion scale， adjusting products structure and con-stmcting a nation wide products distributionsystem and a modem marketing system.

Yili Ltd. has the largest good raw milkbases in China-situated in Hohhot and HuLun-beier grassland of Inner Mongolia; alsoin Du Er-bot grassland of Hei Long-jiandprovince， all of which guarantee the naturalquality of Yili Ltd's products. Yili Ltd. insti-gated methods to solid its raw milk supply. Itinitiated the method of \"company plusfarmers\"; built the operating mode of \"raisingcows seperately， milking cows collectively，good qualities paid with good prices， provid-ing all-round services\". These measures notonly guarantee a sufficent raw milk supply butalso， are viewed as successful experiences by Dairy Industry Association of China that maybe extended to dairy industry nation wide.

Investing about RMB 1 billion succes-sively to the raw milk bases， Yili Ltd. has builtstandard milk stations， cows' herding areas andpastural areas; promoted the mode of \"indi-vidual farmland plus， raising areas plus，pastural areas plus， modem milk stations\"; in-troduced world first class automatic milkingmachines and raw milk quality analysissystem; changed cow raising mode to ascientific， regulated， collective and modem-ized one; set a new mode for the Chinese cowraising industry and set a standard for an ex-cellent raw milk base construction.

So far， cows under the control of Yili Ltd.number more than 1 million. Yili Ltd. has paidcow farmers over RMB 10 billion in total. Theconstruction of raw milk bases has enrichedmillions of farmers and along with the devel-opment of Yili Ltd.， tens of thousands of workpositions have been provided. At the sametime， agriculture has been industrilized， pro-moting related industries' progresses. Devel-opment of Yili Ltd. benefits local economygreatly and also realizes good social effects aswell.

Yili Ltd. excellent products come not only from excellent raw milk but also advancedtechnology and RD system. Since 1999， YiliLtd. has invested successively RMB 0.8 bil-lion in a technoloy reform project. Including，investing RMB 0.26 billion in building thelargest and most advanced UHT milk produc-tion base in China; introducing the completeset of world advanced GER processing equip-ment from Germany; Tetra Pak assembly linefrom Sweden， the entire production processhas been automatized; investing RMB 0.25 bil-lion in Duerbot county in Hei Longjiang prov-ince to build a high quality， milk powder pro-duction base which currently has the biggestproductivity output of single assembly line andthe most advanced technology in China. In2004， the technology center of Yili Ltd. wasevaluated as a national class technology center，which means， Yili Ltd. owns the advancedworld class of technology RD center.Meanwhile， Yili Ltd. has the only provincialclass dairy research insititute in China. All ofabove， excellent raw milk supply， advancedtechnology and equipment and top class RD system， will provide most reliable support forproducts security and stable development ofthe enterprise.

Based on the before mentioned， Yili Ltd.invested RMB 0.35 billion in Hohhot to con-struct the largest production base for dairyproducts in Asia. This new industrial area oc-cupies 300 mu， with 18 assembly lines pro-cessing 1500 ton of fresh milk daily. All equip-ment and technology comes from Germany，Denmark， Sweden and Japan respectively， rep-resenting the highest levels. Automated con-trol is demonstrated from raw milk collection，standardization， UHT packaging， robotic pack-aging and distribution. According to the tech-nological demands of GMP， staff' and productdistribution will be refined in this industrialarea， also， avoiding any pollution in the pro-cess of production， ensuring the quality sta-bility of the products; any high labor intensityworking procedures will be done by robots. Aworld first class automated and three-dimen-sioned storehouse system with the function ofa strong memory identification has beenintroduced. It has a storage place of 21，024，capacity of 20，000 tons and STV self-servicedcars control the transportation. Adapting MES'products perfection tracing chain' to raw milkcollection， final products distribution，marketing; an information center controls theprocedure of packaging; sample collection andchecking are automatically done; effectivelyrealizing a quality control for each productionstep. Applying \"one card\" security system formilk tanker's entering and washing， milkchemical examination， weight measurement，milk collection， milk tanker inside washing.Installing multi-media meeting and audio vi-sual system via intemet， public radio system，public information announcements and search-ing system. The industrial area embodies thetraits of openness， efficiency， practicality， andreliability. It's a perfect combination of toptechnology and design. It will lay a solid foun-dation for Yili Ltd. to enter the top 20 of dairyindustry world wide.

In order to further improve it's core com-petition ability， Yili Ltd. has constructed suc-cessively it's own production bases in middleand west parts of Inner Mongolia， Bei Jing，Tian Jing， Shang Hai， Hei Longjiang， He Bei，Shan Xi， Guang Dong， and Xin Jiang， by themeans of purchase， amalgamation， assets com-bination and trust， to enlarge the scale of theenterprise.

Officially， on Nov. llth 2005， Yili Ltd.became the sole supporter from within thedairy processing industry for the 2008 Bei Jing Olympic Games and thus became the first Chinese food brand supporter for OlympicGames in Chinese History. Since the signa-ture date，Yili Ltd. has provided a series of safe，healthy， high quality dairy products for worldtop athlets， coaches， officals of OlympicGames committees and all related people whowill be attending the Olympic Games.

The standards of Olympic Games inchoosing supporters can be regarded as thehighest in the world. Those that become sup-porters are mostly leading enterprises in theirown lines， are the enterprises which make anddominate standards of their own lines， are theenterprises with full quality control guaranteeand development potential， are the enterpriseswith ability to provide safe， healthy productsand high quality services. That it was singledout from all competitive dairy products brandssymbolized Yili Ltd. had passed the world topquality examinations for its raw milk supplyconstruction， for its technology standards， forits products structure， for its quality controlsystem， for its technology guarantee system，for its products distribution networks， for itsperformance and comprehensive abilities， forits development prospect of enterprise as wellas for its service ability

Bei Jing Olympic Games will be a brandnew starting point in the development processof Yili Ltd. It will be an important landmarkof statistic development of the Yili brand. Thisis also the highest achievement gained by the Chinese dairy industry so far.

Facing the challenge of internationallyeconomic integration， today's Yili Ltd. bringsup its enterprise culture as \"promoting themarket of China， making use of the resourcesof the world\"，\" based on humanity， guaran-teed by systematization， paying attention toteam work， equality and trust\". Being creativeand taking people's healthy life as it'sresponsibility， Yili Ltd. is striving to realizeits goal of being one of the top 20 world dairyenterprises by the year 2012.