Hope Has Its Own Power: Liu Yonghao, Chairman of New Hope Group

In February of this year, after attending a symposium on private enterprises, Liu Yonghao, Chairman of New Hope Group, stated in an interview that the goal is to be a good old farmer, cultivate new farmers, and develop agriculture well.

As a leading company in the livestock industry, New Hope has spent the past few years reducing costs, improving quality, adjusting its structure, and stabilizing its scale, proactively focusing on its core business and aiming to emerge from the bottom of the industry cycle by 2024. Today, the impact of the cycle has not yet completely faded, and Liu Yonghao said, "We still need more patience."

"Perseverance will always pay off, and hope has its own strength." In New Hope's 2025 New Year's message, Liu Yonghao expressed confidence. He firmly believed that "enterprises will transform and upgrade in line with national strategies, and through innovation, develop a scientific growth model, which will help traditional industries revitalize."

Running a business like a "marathon"

On April 2, New Hope Liuhe, New Hope's largest industrial division, released its 2024 interim results. The company achieved total operating revenue of approximately 103.063 billion yuan for the year, a year-on-year decrease of 27.27%. Despite declining revenue, profitability has rebounded significantly. In 2024, New Hope Group's net profit attributable to shareholders of the parent company reached 474 million yuan, a year-on-year increase of 90.05%. Its non-GAAP net profit for the same period reached 616 million yuan, marking a turnaround from loss to profit.

For the previous three years, New Hope Group had suffered consecutive losses in non-GAAP net profit. This turnaround is attributed not only to industry factors such as price recovery but also to the initial success of New Hope's "slimming down" initiatives. Starting in 2021, New Hope Group will prioritize cost control.

"When some industries hit a slump, I often ponder the root causes," said Liu Yonghao, explaining that during the previous period of rapid expansion, the business model was to build factories, hire staff, purchase equipment, and source raw materials, aiming to sell as much as they could produce. However, in the phase of high-quality development, continuing with the old approach of blindly expanding production will only lead to greater losses. "We must keep pace with the changing times and explore how to achieve new development with new drivers."

"After weathering repeated industry and economic cycles, we have a deeper understanding of the saying 'running a business is like running a marathon.'" Liu Yonghao sees slumps as a "sharpening stone." "Slumps can teach companies how to adapt and navigate the market. After three years of 'sharpening the knife,' our ability to cope with difficulties has improved significantly."

"Companies must learn to navigate cycles." Liu Yonghao summarized New Hope's four strategies during the previous slump: focusing on core businesses, proactively adjusting structures, and appropriately reducing scale; strengthening management to reduce production costs and controllable expenses; focusing on technological innovation to improve efficiency; and developing new products to adapt to the market.

Liu Yonghao believes that industry cycle fluctuations are influenced by multiple factors, including livestock inventory, raw material prices, epidemics, and consumption. The increasingly mature large-scale models are expected to become a powerful tool for predicting industry cycles.

"We lead in feed production and sales, and can estimate livestock production based on feed volume. We have decades of historical livestock data and real-time access to raw material prices, futures fluctuations, and market trends. Data is our advantage." Liu Yonghao explained that New Hope plans to integrate government data and international market data to build a large-scale model for predicting industry cycles, providing a reference for production planning.

"In 2024, I said we won't lie low or worry. This year, we're talking about a new landscape and new initiatives." Liu Yonghao believes that my country boasts a massive market of over 1.4 billion people, the shining brand of "Made in China," and a comprehensive industrial and infrastructure system. "By seizing advantages, seizing opportunities, maintaining confidence, and working diligently, we will surely forge a path of modern enterprise development with Chinese characteristics."

Technology is irrigating agriculture and animal husbandry

This year's Central Document No. 1 for the first time calls for "developing new agricultural productivity," explicitly promoting the coordinated development of agricultural science and technology. Liu Yonghao stated that New Hope has invested over 40 billion yuan in recent years in industrial transformation and development.

Breeding is the core competitiveness of agricultural and animal husbandry enterprises. In recent years, New Hope has intensified its efforts to achieve breakthroughs in breeding. "Most of my country's original pig breeds rely on imports, resulting in a vicious cycle of 'introduction, maintenance, degeneration, and re-introduction.' We independently developed the 'Core Hope' pig gene chip for early breeding, which is expected to gradually reduce our reliance on foreign seed sources," Liu Yonghao said. New Hope also collaborated with the Chinese Academy of Agricultural Sciences to breed Zhongxin white-feathered broiler ducks, breaking the foreign monopoly on core broiler duck seed sources.

Feed is the largest component of grain consumption. New Hope Feed produces over 28 million tons annually, making it one of the largest grain-consuming companies in China.

"In terms of feed raw materials, my country's soybean and corn yields are approximately 60% of those in certain developed countries. From the feed perspective, China's pig feed conversion rate is approximately 80% of the internationally advanced level." Having spent years in agriculture and animal husbandry, Liu Yonghao is familiar with all kinds of data and is concerned about the gap with developed countries.

"my country faces a significant shortage of feed protein and is highly dependent on soybean imports, importing 100 million tons annually," Liu Yonghao explained. To overcome this dependence, New Hope has partnered with Huazhong Agricultural University to increase the protein content of corn from 8% to 12%. According to calculations, last year's national corn production totaled 290 million tons. Every 1 percentage point increase in protein content translates to an additional 2.9 million tons of protein. If all this protein could be effectively utilized, it would translate to a reduction of over 7 million tons of soybean imports.

"Traditional industries must leverage technology to improve quality, output, efficiency, and value, rejecting low-level, low-quality, and inefficient, disorderly competition," Liu Yonghao said.

Qualitative change requires "intelligent change."

As a traditional consumer product, the dairy industry is relatively saturated and a typical example of a highly competitive sector.

"From milking and processing to packaging and sales, the entire process is controlled within 24 hours." Liu Yonghao sees the "fresh strategy" as a fulcrum for leveraging new consumer demand. "Consumers are demanding higher quality and more distinctive products, so we must adapt to the new situation and meet these demands."

Behind this "freshness" lies a comprehensive breakthrough in production efficiency, cold chain technology, and logistics speed. Liu Yonghao told reporters that traditional cold chain distribution suffers from high losses, low efficiency, and high costs. New Hope Dairy has built a smart platform for cold chain logistics, which provides real-time updates on in-transit truck delivery status. All variables, including people, vehicles, roads, warehouses, and goods, are fully controllable online. Dispatch time has been shortened from 4 hours to 10 minutes, average fuel consumption for drivers has been reduced by 8%, inventory turnover days have dropped by 20%, and overall cold chain logistics costs have been reduced by nearly 20%.

Today, 24-hour fresh milk has become New Hope Dairy's flagship product, and its cold chain logistics business has also flourished. In November 2024, Fresh Life Cold Chain completed a Series B+ financing of nearly 900 million yuan, marking the largest single-round financing in China's cold chain logistics industry.

"Digitalization not only helps New Hope quickly respond to market demand and unlock greater consumer potential, but also opens up new avenues for production management," said Liu Yonghao, adding that New Hope plans to digitally empower every aspect of its operations, including breeding, cold chain operations, processing, and sales.

Liu Yonghao stated that agricultural and animal husbandry enterprises should embrace a broad agricultural perspective, focusing not only on production but also expanding into processing, distribution, marketing, and services to build a more resilient industrial chain.

In Liu's view, digital transformation is a systemic change involving the restructuring of the industrial chain, requiring sustained effort and exploration from companies. He stated, "Digitalization will undoubtedly promote the shared development of partners across the entire industry chain, upstream and downstream, and create long-term value for companies, the industry, and society."

Rooted in the countryside, striving for shared success

In the highly cyclical livestock farming industry, the dilemma of "high prices hurting farmers, low prices hurting farmers" is particularly pronounced. Liu Yonghao has been pondering how to resolve this dilemma.

In recent years, New Hope has partnered with farmers to promote moderate concentration in livestock farming. New Hope is responsible for building farms and fattening facilities, providing feed, vaccines, and teaching new breeding techniques, while farmers are responsible for raising livestock. Liu Yonghao said, "This model not only helps farmers reduce breeding costs and market risks, ensuring stable returns, but also promotes faster business development, achieving a win-win situation."

"New Hope was born and developed in the countryside. It is precisely because of rural areas that we have become a Fortune 500 company. We have a deeper responsibility to help farmers increase their income and promote rural revitalization." Liu Yonghao has served as a member of the National Committee of the Chinese People's Political Consultative Conference for six terms and a deputy to the National People's Congress for one term. He has submitted over 200 proposals and bills, and the "three rural issues" have always been a focus of his attention.

In 1994, Liu Yonghao co-founded the Guangcai Project with nine private entrepreneurs to encourage private enterprises to contribute to rural areas. In 2020, he proposed the "Five-Year Plan" for rural revitalization, which aims to invest 50 billion yuan over five years, create 50,000 new jobs, provide public welfare training for 50,000 new farmers, support 50,000 farmers and small and medium-sized enterprises, and build five rural revitalization models.

Liu Yonghao believes that talent shortage is the biggest bottleneck to rural revitalization. New Hope has developed its own teaching materials, hired its own teachers, and offered online and offline courses on modern agricultural techniques, training over 85,000 new farmers nationwide. Liu Yonghao also supports the cultivation of leaders in rural collective economies, having held four sessions of "Village Leader Training" for rural revitalization. "Some of the 'Five-Year Plan' projects have been largely completed, some have exceeded targets, and some are still underway," Liu Yonghao said. "With the advancement of the times, the support of technology, and the participation of businesses, rural revitalization will surely accelerate."

"In the long run, the true benefit lies in everyone's well-being," Liu Yonghao said, adding that New Hope is still exploring a more comprehensive win-win model. "Agricultural modernization must ensure that farmers' lives continue to improve."