Feihe: Achieving Competitive Advantage through Strategic Transformation

Following the 2008 China milk scandal, Chinese infant milk formula products were regarded as unsafe, and Chinese consumers were preferring to pay high prices for the products of foreign brands. As one of the few companies not involved in the milk scandal, China Feihe Limited (Feihe) was able to maintain steady growth in product sales in the medium- and low-end market, but it did not have a differentiation advantage over foreign brands; therefore, its sales results in the high-end market were poor. In 2015, Feihe carried out a strategic transformation and repositioned its brand proposition, which led to increased customer value. The company also launched a new product series, which allowed it to create a competitive advantage. In 2019, Feihe was listed on the Hong Kong Stock Exchange. However, other brands started to imitate Feihe in developing products that were suitable for Chinese babies, which made investors doubt whether or not Feihe could maintain its competitive advantage. What action should Feihe take to maintain its competitive advantage and its position in the market?

This case can be used in strategic management and business management courses at the undergraduate or graduate level. This case will help students become familiar with the development of the infant milk formula industry in China and with how the processes used by Chinese brands in this industry overcame the challenge of losing their position to foreign brands. After reading the case and analyzing the discussing questions, students will be able to do the following:<ul><li>Analyze the industry environment and competitors.</li><li>Understand the characteristics of different types of competitive strategies.</li><li>Identify and discuss the role of resources in developing a competitive advantage.</li><li>Grasp the concept of customer value and understand the key to repositioning.</li><li>Describe the strategic transformation process through which companies create a competitive advantage.</li></ul>

• competitive strategies
• enterprise resources
• customer value
• repositioning