September 5, 2007

 

China's Yurun continues aggressive expansion

 

 

China Yurun Food Group, one of the top three pork producers in China, said it would seal three acquisitions by the end of the year.

 

Like other companies in the fiercely competitive pork market in China, the company climbed to the top three through numerous acquisitions. Despite astronomical growth rates for the past decade, China's top three processors still account for less than 5 percent of China's pork market.

 

Yurun hopes to leverage its brand to grab a larger share, spending millions on its advertising. The company would mostly acquire firms in the slaughtering sector, but did not disclose details.

 

The company is now present in 260 Chinese cities, and plans to break into as many as 50 new cities and launch more than 10 products by the end of this year, Zhu said.

 

It would also be expanding capacity, protecting profit margins despite rising hog prices and addressing global concerns about the safety of Chinese-made food.

 

To accomplish these lofty aims, the company has allocated a sizable RMB 1.5 billion (US$200 million) for capital expenditure until the end of 2008.

 

On the safety issue, Yurun Chairman Zhu Yicai said global concerns about the safety of Chinese products were misplaced. However, the extra attention benefits the industry as it would pressure firms to improve.

 

The company announced its first half profits rose 50 percent to RMB 380 million (US$50.3 million) last week. Analysts expect a 25-percent rise in annual net profit to RMB 611.36 million (US$80.9 million).

 

Yurun previously said it plans to boost its upstream hog slaughter capacity to 15.7 million heads by end-2007, while lifting downstream meat processing capacity to 218,000 tonnes.

 

Despite its expansion plans locally, Yurun has no plans to venture outside China at the moment, since the country itself is a vast market. However, the company may consider exporting to Japan and Russia in the longer term, Zhu said.