(Yicai) Nov. 1 -- FrieslandCampina, one of the world's largest dairy cooperatives, has appointed Zhang Zhanhong, a former executive at Wyeth Nutrition and Danone, as its new China president, following the resignation of the previous incumbent in mid-August.

Zhang, who replaces Grace Chen, has headed up infant formula sales at a number of multinationals, FrieslandCampina said today, adding that he was also general manager of Haleon’s over-the-counter drugs division in China and managed Tianjin Smith Kline & French Laboratories.

The Dutch dairy giant likely chose Zhang for his extensive experience in multi-tier markets in the hope that he can ensure business continuity, said Song Liang, an independent dairy industry analyst.

Over the past two years, the Amersfoort-based firm has successfully addressed a common pitfall for foreign infant formula brands -- increasing sales at the cost of shrinking margins -- by adopting a direct-to-consumer sales strategy that uses digital technology to connect the company directly with stores and consumers.

Zhang’s expertise in new retail and lower-tier markets could be particularly valuable for FrieslandCampina, Song noted, as China’s infant formula market contracts, smaller cities are becoming key battlegrounds. Zhang will need to develop new grassroots markets and deal with stiffer competition in existing ones, while avoiding aggressive pricing tactics, Song said.

FrieslandCampina also reaffirmed its commitment to the Chinese market, dismissing rumors of layoffs and highlighting plans to further invest in China.

China’s declining birthrate is transforming the mother and baby product market. Suppliers are increasingly looking to lower tier cities to open new sales channels, as 70 percent of baby formula buyers are in third- and lower-tier cities, with 60 percent preferring to buy from physical stores, according to an annual market report by iiMedia.

Editors: Tang Shihua, Emmi Laine