July 9, 2007

 

Consolidation needed in China's soy protein market

 

 

The Chinese soy protein market needs to consolidate in order to be profitable, according to Solbar, an Israeli company with a soy production facility in China.

 

Solbar is a relatively newcomer to the Chinese market, having only set up its factory in 2005, according to foodnavigator.com. The factory, located in the Ningbo Free Trade Zone, southeast of Shanghai, was the company's first production base outside Israel.

 

In 2005, the Chinese soy market was said to be growing at around 10 per cent per year, double the pace of global growth.

 

This meant that companies rushed into the China market, hoping to profit from it.

 

However, stiff competition has meant chaos and overproduction, said Gary Brenner, VP marketing and sales at Solbar.

 

Even though China's soy market is still expanding, Brenner said all the players are in a state of depression over costs and price. 

 

Still, as the market matures and more players fall out due to the stiff competition, there are increasing signs of consolidation.

 

Solbar said there were around 32 companies in China when it entered the market, now, this has dropped to 20.

 

By 2009-10 Brenner expects only about five to remain.

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