February 20, 2012
Brasil Foods establishes joint venture in China
Brasil Foods S.A. (BRF) has announced the establishment of a joint venture with Dah Chong Hong Limited, with aims of gaining access to the domestic distribution market, engaging in local processing, developing the Sadia brand in China, and reaching retail and food service channels in neighbouring Hong Kong and Macau.
Dah Chong Hong, Limited (DCH), incorporated in 1949, is a wholly owned subsidiary of Dah Chong Hong Holdings Limited (DCHH), which is a business conglomerate whose shares are listed on the Hong Kong Stock Exchange since 2007.
DCH is one of the largest distributors of automobiles, food and consumer products in China and Hong Kong, with infrastructure for distributing chilled and frozen food. Its operations span the markets of Mainland China, Hong Kong and Macau.
DCHH is currently owned to approximately 55.9% by CITIC Pacific Limited, a public company listed on the Hong Kong Stock Exchange and ultimately owned to approximately 56.7% by CITIC Group Corporation, a state-owned company incorporated in the People's Republic of China.
The joint venture between BRF and DCH covers both raw and processed products, and will focus on overall capability building and the relevant business operation in local market, including sales, importation, procurement of products, customer clearance and trade marketing. The joint venture's leadership will be shared, with the same number of representatives from both companies on its Board of Directors and Executive Committee.
BRF will focus on production, technical support and marketing for the products to be sold by the joint venture. Meanwhile, DCH will concentrate on supply chain and distribution operations, processing and packaging services, and various kinds of operation support during the initial transitional phase.
It is estimated that the joint venture will sell volumes of more than 140,000 metric tonnes, with revenues of approximately US$450 million in the first year, and investment made in its working capital.
