Zhongpin to build pork plant in eastern China

by Bryan Salvage
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CHANGGE, CHINA – Zhongpin Inc. will begin constructing a new processing plant and a distribution center in August to produce chilled and frozen pork as well as prepared pork products and to broaden its cold-chain logistics business in the Chinese city of Jiangyan, Jiangsu province.

“This will be Zhongpin's first production and logistics entry into the eastern China market, where we expect to create additional returns on investment for our shareholders,” said Xianfu Zhu, chairman and chief executive officer. "This eastern region, which includes the Yangtze River Delta with Shanghai as the center, has a large population and huge consumption potential. The Jiangyan region, in particular, is a rich and fertile growing area with abundant hogs, vegetables, fruits, and other high-quality agricultural products, and is the perfect location where we can produce our food products to serve Eastern China.”

Zhongpin now has a high brand awareness in the Eastern China market, he continued. The company currently distributes to this market from its plants in Henan province in central China, using its cold-chain logistics system.

“The newly built plant will save on our delivery costs, quicken our response to the market, further enhance customer awareness of our brand and is expected to increase our profitability in the eastern China,” he added. “As we have successfully done in our other market expansions, we will increase our production that is focused on middle- and upper-income customers, produce high-quality and safe food products and serve several market segments. We should capture a substantial share of the market in eastern China.”

Construction will begin in August 2010 in two phases. The production lines, which will be mainly for chilled pork and frozen pork, and the related cold-chain logistics system are to be completed in the first phase in the third quarter of 2011.

The second phase, with the production lines primarily for prepared pork products, is expected to be completed in the first quarter 2012. The plant will occupy an area of about 36 acres. Zhongpin will invest about $63 million in the new plant, including the land use rights. About 60% of the plant’s advanced equipment will be sourced globally.

The plant’s annual capacity will be about 130,000 metric tons, with chilled pork, including easy-to-cook pork, accounting for about 80,000 metric tons, frozen pork for about 20,000 metric tons, and prepared pork products for about 30,000 metric tons.

A new subsidiary company, named Taizhou Zhongpin Food Co. Ltd., will have an initial registered capital of $7.3 million. The new plant will be located in the Jiangyan Economic Development Zone of Jiangsu province.

Zhongpin Inc. is a meat and food processing company specializing in pork and pork products, vegetables and fruits in China. Its distribution network in China covers 20 provinces plus Beijing, Shanghai, Tianjin, and Chongqing and includes more than 3,000 retail outlets. Zhongpin's export markets include the European Union and Southeast Asia.
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