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Sales of Yili climbed 34.2 percent to 16.34 billion yuan last year while Mengniu achieved a 50 percent jump in sales to 16.1 billion yuan.

But Mengniu, the Chinese partner of Groupe Danone SA, earned a higher profit of 727.4 million yuan against Yili's 345 million yuan last year.

"As the exclusive dairy sponsor for the 2008 Beijing Olympics, Yili is in an advantageous position to boost sales and lift its brand image," said Wang Dingmian, an official from Guangdong Dairy Association.

Shanghai-based Bright Dairy & Food Co's profit gained 41 million yuan in the first three months, an increase of 11 percent from a year earlier.

The demand for dairy products in the country is expected to rise 12.8 percent annually to reach 38 million tons by 2010.

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