My contribution to a board
I would bring a board the habits of someone who has spent five years presenting to an audit committee in a listed, state-linked company and three and a half years presenting to a board that included private-equity investors. I know where a consumer company's judgement hides: in rebate accruals, in the line between a supermarket fee and a revenue deduction, in refund estimates for online sales, in the credit extended to distributors and in the stock sitting in their warehouses. Those are the areas where a company's reported revenue and its cash most often part company, and they are rarely explained in the papers a committee receives.
On a mainland board, the CSRC's rules expect the audit committee of a listed company to be led by an independent director with accounting expertise, and to give it real authority over financial reporting and the external auditors. I meet the expertise test, and I would be ready to chair an audit committee after a year as a member. I would not ask to chair one on arrival, because a consumer company's judgements depend on its channels, and I would need to learn them first.
I would also bring experience of arguing a minority shareholder's case to a controlling one. At Cuiling I recommended deferring a Hong Kong listing our chairman favoured and declining a request for credit support from a sister company of our largest shareholder. In both cases the relationship survived because the argument was made in a paper with figures, and because I said plainly what the other side's case was worth. An independent director in a controlled company needs that habit more than any other.
Judgement in practice
01Declining to stand behind a shareholder affiliate's loan
In 2022 a food-processing company controlled by our largest shareholder asked Cuiling to act as surety for a RMB 300 million bank loan. Credit support for a related party by a listed company requires board approval and, in most cases, approval by shareholders, with the related shareholder abstaining. The request came with a recommendation from our chairman. I reviewed the borrower's accounts and found that its cash flow covered interest only in its best year of the previous five. My paper set out the benefit to the group relationship, the probability of loss on our own estimates and the disclosure we would have to make. I recommended declining and offering instead to buy its products on normal terms, which it valued more. The board declined the request. As a director I would ask for the borrower's numbers before the chairman's view, every time.
02A year-end rebate accrual that sales wanted to move
At the end of 2021 our sales organisation proposed that RMB 64 million of fourth-quarter distributor rebates be recognised in January, when the rebate statements would be agreed. The rebates had been earned on 2021 volumes, and under the revenue standard they were variable consideration that belonged in 2021 revenue. Moving them would have lifted that year's revenue and profit and depressed the next. I accrued the full amount, explained the estimate to the Audit Committee and agreed it with our auditors before the results were approved. The sales team's bonuses that year were lower as a result, which I told them myself. On a committee I would ask management how each year-end accrual compares with what was eventually paid, because that comparison shows whether a company's estimates lean one way.
03An incentive measure that would have paid twice
In 2022 the board's remuneration and appraisal committee was reviewing senior managers' incentive measures, and management proposed online gross merchandise value as one of them. I wrote to the committee chair through the board secretary to point out that gross merchandise value included sales that were later refunded and that it rewarded the deep discounts we were then trying to stop. Executives would have been paid for the revenue and again for the promotions that produced it. I proposed online net revenue after refunds, with contribution as a gate. The committee adopted both. As a director I would test every incentive measure by asking what behaviour it would reward if management pursued it hard.
My first year on a board
Before my first meeting I would ask for the three most recent annual reports, the audit committee's minutes and the external auditors' key audit matters for the same years, and I would read the rebate, returns and credit-loss notes before anything else, since those are where a consumer company's estimates sit. I would ask to visit one distribution centre, one large customer and one stretch of the online operation, because I want to see the stock that the numbers describe.
During the year I would keep a written list of the questions I raised and the answers I received, and review it with the committee chair at the half-year. I would meet the external auditors and the head of internal audit without management present at least twice, as good committee practice expects. I would spend my on-site days in the business rather than in a meeting room. At the year end I would ask the board chair whether my questions had changed any decision, and if none had, I would want to know why.
Conflicts and their management
Three kinds of conflict matter for me, and I would deal with each before accepting a seat. The first is commercial. Cuiling sells to supermarket and convenience chains, tea-drink and bakery chains and online platforms, and buys packaging, feed and logistics services. I would not join the board of any of them, of any dairy or beverage company, or of any company in which Cuiling's largest shareholder has a significant holding.
The second is my employer. Cuiling's board must consent to any outside directorship, and I would show it the company, the committees and the time required before accepting. The third is time. Two listed companies' reporting calendars overlap every quarter, so I would agree meeting dates a year in advance, protect twenty-five days including preparation and on-site work, and decline a second seat while I remain an executive.
If a new relationship arose after I joined, for example the company starting to buy from Cuiling, I would disclose it at once, stay out of the discussion and, if the relationship looked lasting, offer to step down.
My independence statement
I hold Cuiling shares through its employee share scheme and draw my salary from it, and nothing else ties me to any listed consumer company. I would put every relationship I have, with Cuiling, its largest shareholder, its customers and suppliers, and my own family, in front of a nominating board before it decided anything. Whether I am independent of a particular company under its exchange's rules is for that board to decide, and I would expect it to ask more questions than I volunteer.
Board and committee exposure
Presented to the Board or a committee
Cuiling Dairy Company Limited
Board of directors: results, budgets, capital expenditure, the raw-milk commitments and the Hong Kong listing proposal
April 2021–present
Attends every board meeting as a senior manager and presents management's financial papers; not a director of the company and holds no vote.
Presented to the Board or a committee
Cuiling Dairy Company Limited
Audit Committee: periodic reports, revenue deductions and rebate accruals, credit losses, related-party transactions and internal control
April 2021–present
Presents financial statements, judgements and related-party papers at every meeting; meets the committee with the external auditors twice a year; not a member.
Reported to a committee
Cuiling Dairy Company Limited
Strategy Committee: the raw-milk supply balance, currency exposure and capital structure
March 2023–present
Reports each quarter on the cost of the contract-farm commitments and, since 2025, on the conditions for reopening the Hong Kong listing question.
Served as a director
Cuiling Ranch Company Limited
Board of the wholly owned ranch subsidiary
June 2021–present
Director in an executive capacity, approving the subsidiary's budgets, herd investment and borrowing within limits set by the parent board.
Presented to the Board or a committee
Mingxi Beverage Company Limited
Board of directors, including two private-equity directors: monthly results, refinancing and the Hong Kong listing
September 2012–March 2016
Presented every board paper on finance and the listing as CFO; not a director.