Mitsubishi Corp. has agreed to form a joint venture with the largest Chinese state-run food conglomerate to raise livestock and process it into meat for China's increasingly Westernized dinner tables, The Nikkei reported
The general trading house and affiliates Itoham Foods Inc. and Yonekyu Corp. will together take a 33% stake next month in a holding company for Cofco Corp.'s meat business. This will mark the first partnership of its kind between the Chinese state enterprise and a Japanese company.
The joint venture will spend CNY10 billion, or around Y124 billion, on farms, processing plants and distribution centers by 2017, and aim for sales of Y220 billion that year.
Chinese consumed 76.5 million tons of meats in 2009, accounting for 30% of worldwide consumption. Much of the nation's meat supply comes from small-scale farmers, and modernization remains a challenge.
In one lagging area, hygiene, Mitsubishi and its two affiliates will help Cofco adopt advanced Japanese quality control methods. In turn, they will make a play for a piece of this fast-growing market.
Per capita, Chinese consumed 38kg of pork last year, twice as much as two decades ago, according to estimates by the U.S. Department of Agriculture. But they still eat less meat overall than Americans or Europeans, the data shows. China's own figures, meanwhile, show that Chinese living in rural areas eat only about half as much meat as city dwellers. Demand looks certain to continue growing at a breakneck pace.
Mitsubishi will consider involving group firms in related Chinese businesses, such as livestock feed and food distribution. The trading company owns a little over 20% of Itoham and nearly 25% of Yonekyu, a Shizuoka Prefecture-based meatpacking firm.
Chinese demand for animal feed, especially soybeans, is surging. China accounted for more than half of worldwide soybean imports in 2010 -- nearly 60 million tons, up fivefold from a decade earlier.
Mitsubishi has a contract to supply a Cofco group firm with up to 5 million tons of soybeans a year. By expanding its business with Cofco, the trading house is also looking to buy grains on more advantageous terms, including for the Japanese market.
Source: The Nikkei