April 16, 2012

Brazilian meatpacker, Marfrig will be investing in distribution centres in China.

Marfig Alimentos, one of the world's largest meat corporations, said in a press release that through its subsidiary Keystone Foods, it will be participating in two joint ventures with Chinese companies with the purpose of exploring opportunities to supply food products and meet the growing demand for distribution in the Chinese market.

The first of them is with Cofco (China's government food export-import corporation) and will concentrate on distribution with the construction of six hubs, plus transport fleets in China's six strategic cities. The project takes off in 2012 and will involve US$252 million. The cities include Beijing and Shenzhen, Chengdu, Shanghai, Shenyang and Wuhan.

The other is with Chinwhiz Poultry with the purpose of implementing a vertical integration in poultry operations in China. The joint venture will initially have a processing capacity of 200,000 chickens per day and will be able to supply 50% of the raw material needs of Keystone's processing unit in China.

The unit already serves over 2,600 restaurants in China, Hong Kong and Japan. The role of Keystone will be to use the knowledge it gained from managing similar vertically integrated operations in the US. The investment in the poultry joint venture is estimated at US$57 million over a two year period.

Marfrig stated in a press release: "With these investments, Marfrig will be strategically positioned to meet the growing demand for food in the Chinese market, with operations that range from processing to distribution to clients."

The announcement comes after the gradual opening of the Chinese market for Brazilian pork, in November 2011. At the time, three out of thirteen abattoirs have been selected for exporting pork to China. Negotiations to gain access to the Chinese market had been on-going since 2009.