Yunnan Baiyao: Internationalization and Diversify Proposals

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Yunnan Baiyao: Internationalization and Diversify Proposals After celebration of its 100 years anniversary, Yunnan Baiyao started its new journey with new slogan “one core and four growth areas”. Mr. Wang Minghui intended to infuse new energy into this century-old company, internationalization and diversification were just his desired choices. Now opportunities came, YB could take 3M’s proposal to cooperate in transfermal products and international market, or exploit new market of healthcare products on its own. We hold the opinion that both the options are good, YB’s current strategies will be well supported by them. Furthermore, we suggest that YB combine those two actions. Mr. Wang should start them as soon as possible. Performance of YB Benefited from its successful vertical integration and tentative diversification of its products, YB has made a dramatic improvement. The revenue of the company reached 1.1 billion RMB in 2002, almost 5 times than 1999. And its net profit reached 97 million RMB, almost 3 times than 1999. And in 2002, YB’s ROE ratio reached 0.5, ROA was 20%, shows that YB was very lucrative. Despite its high developing speed and profits, YB also has stable financial position. The debt to assets ratio was 40.5%, a very low level. The current ratio was 1.6 , shows that the company has rich cash reserve. In general, YB has showed very good operation performance. YB also formed a good organization environment along with its corporate reform. After a fully restructuring of departments, YB identified its boundaries of responsibilities and optimized its organization structure to a more functional and efficient level. Meanwhile, compensation point system and other measurements were used to motivated employees on a fair basis. YB also used its e-Commerce platform to bring up its internal entrepreneurs through a benchmarked incentive. Actually

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