July 17, 2008

Tyson to invest in Chinese poultry processor

US meat producer Tyson Foods Inc. will buy 60 percent of Xinchang Group to boost chicken processing operations in China, said Tyson's China representative yesterday.

The framework agreement is currently pending government approval, said Tyson's Shanghai-based country manager James Rice, who declined to reveal how much the deal is worth.

Tyson's plans to acquire a majority stake in China's fifth-largest poultry processor comes hot on the heels of the company's recent completion of a new chicken processing and packing plant in Shanghai. The new plant is slated to sell 40 million chickens yearly to the thriving Yangtze River Delta market.

Shandong-based Xinchang, which had sales of US$289 million last year, will have capacity to process 125 million chickens per year once a new plant begin operations next month.

China's economic growth has increased the people's appetite for meat and poultry over the past two decades. The sprouting of more urban areas has led to increased use of refrigerators, and more Chinese have switched from buying live chickens to processed and frozen meat from supermarkets.