China Mengniu Dairy Co Ltd appointed Ning Gaoning, chairman of COFCO Corp, as its new chairman following the resignation of its founder Niu Gensheng Friday.

Experts have said the personnel changes will help Mengniu perfect its industrial chain, as well as boosting COFCO's presence in the country's leading dairy producer.

"Niu wishes to devote most of his time to charitable work, which has been his wish for a number of years," Mengniu said in a statement filed with the Hong Kong Stock Exchange, adding that Niu would remain as a non-executive director, and would continue to be involved in the group's strategic planning.

Mengniu's shares closed up 1.42 percent at HK$25 ($3.2) Friday, outperforming the Hang Seng Index, which fell 0.84 percent.

"Niu's resignation will not affect Mengniu's business, as his personal influence in Mengniu now is not as much as in the era before COFCO joined, and Ning's replacement can help Mengniu improve its industrial chain management," said Lao Bing, president of Shanghai-based Mental Marketing Dairy Consulting, Sunday.

State-owned food and oils importer and exporter COFCO, together with Hopu Investment Management Co, bought a 20 percent stake in Mengniu in July 2009, making the two companies the biggest shareholder in the dairy giant.

Yu Xubo, president of COFCO, told reporters Friday in Hong Kong that COFCO was willing to increase its share in Mengniu in the future.

Mengniu has more than 6 billion yuan ($925.8 million) in cash and plans to look into acquiring some domestic and overseas companies, Zhao Yuanhua, spokeswoman for Mengniu, told the Global Times Sunday.

"We are still in the negotiation process," she said, without giving details. Mengniu's most recent move was to acquire a 51 percent stake in Junlebao Dairy Co, China's fourth-largest yogurt maker, for 469.2 million yuan last November.

Experts pointed out that the government is encouraging mergers and acquisitions in the dairy industry as part of a push to improve product quality, following the melamine scandal in 2008.

"Mengniu's potential acquisitions are also in accordance with COFCO's strategy, which aims to build a whole industrial chain from farm to table," said Chen Lianfang, dairy industry analyst with Beijing Orient Agribusiness Consultant Sunday.

"But how to coordinate the two sides' interests is a problem for Mengniu and COFCO's senior management."

"Mengniu should use the money to improve its dairy farms and rebuild its brand rather than make aggressive acquisitions, as they won't boost the company's profit much," said Lao.