Summary of the News
This report discusses the sudden death of Li Tuchun, the 66-year-old founder of Taizi Milk, who suffered a heart attack in 2026. For more than a decade before his death, he was involved in legal battles to reclaim the rights to the core trademarks “Taizi” and “Rishu,” which he had built from scratch. The once nationally renowned brand, with annual sales of 3 billion yuan and a 70% market share in lactic acid bacteria beverages, has since declined significantly. After being fully acquired by Sanyuan Group, the company has incurred cumulative losses of 270 million yuan over 14 years, with annual revenues dropping to just 30 million yuan. The old Zhuzhou factory has long ceased production, and the products are now manufactured by third-party manufacturers. Neither the investors who acquired the brand nor Li Tuchun himself, who later attempted to revive it, were able to restore Taizi Milk to its former glory. This case serves as a poignant example of the unfulfilled ambitions of China’s first generation of grassroots private entrepreneurs.
Detailed Analysis
1. Why couldn’t Li Tuchun reclaim the Taizi Milk trademarks after so many years of litigation?
Many believe that as the founder, Li Tuchun was entitled to the trademarks, but legally, he had no chance of winning. In 2011, Taizi Milk underwent a formal bankruptcy reorganization process, during which Sanyuan and Xinhualian invested a total of 715 million yuan to take over all of Taizi Milk’s debts and liabilities in exchange for 100% of its equity, factories, and trademarks, as confirmed by the court. Li Tuchun’s attempt to reclaim the trademarks after his release from prison was essentially an attempt to overturn the established bankruptcy rules, which would require the investors to give back the assets they had acquired. The law would not support such a request.
2. Why did Sanyuan, a “national brand,” lead Taizi Milk into continuous losses?
It’s not that Sanyuan lacks capability; from the beginning, it never intended to invest heavily in reviving the brand. Sanyuan acquired Taizi Milk with the intention of exploiting its weaknesses. Its own products in the常温 and low-temperature milk categories were not successful, so it hoped to use Taizi Milk to enter the lactic acid bacteria market. However, it found a mess: the old factory’s equipment was in disrepair, and the distributors who had made money with Taizi Milk had moved on to other brands. The lactic acid bacteria market was already dominated by giants like Yili and Mengniu, making it impossible for Sanyuan to invest heavily in rebuilding the supply chain, expanding channels, or advertising. Sanyuan’s main business was already competing fiercely with Yili and Mengniu, so it saw no point in investing in a declining brand.
3. Li Tuchun’s own actions contributed to Taizi Milk’s downfall
Although some blame the failure on foreign investors, Li Tuchun’s business strategies were flawed. His success in the early 2000s relied on a combination of a high bid on CCTV and a risk-free distributor model, which led to rapid growth. However, with annual sales of only 300 million yuan, investing 300 million yuan in five new production bases was like running a restaurant with a monthly profit of 100,000 yuan. He also invested in unrelated areas such as children’s clothing and real estate, depleting his available cash and relying on loans to sustain his operations. The 2008 melamine scandal and the global financial crisis exacerbated the situation, leading to a collapse of his business.
4. Li Tuchun’s second attempt at entrepreneurship was doomed
In his later years, Li Tuchun launched a new dairy product project with goals of achieving 2.8 billion yuan in sales by 2024 and over 10 billion yuan in three years. However, his company was eventually transformed into a consulting firm, indicating that the era of easy success he had enjoyed was over. His success was due to three factors: CCTV’s dominance in the 1990s, the lack of competing dairy giants, and the unregulated distributor model. These advantages no longer apply in today’s market, where giants like Yili and Mengniu control the distribution channels, and new brands struggle to gain a foothold in a highly competitive market.
5. The legacy of Li Tuchun as a grassroots entrepreneur
Li Tuchun’s story reflects the challenges faced by early private entrepreneurs in China. He started as a street vendor and built a national brand through bold entrepreneurship, but lacked modern management skills. He mistook short-term luck for long-term success, over-leveraged his business, and diversified recklessly, ultimately facing a collapse during economic downturns. His death marked the end of an era of grassroots entrepreneurship in China.