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? Haixin Huang is affiliated with Dalian University of Technology.