Food firms rush to expand presence in mainland China

Dec 01, 2003 Ι Industry In-Focus Ι General Items Ι By Ben, CENS
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Taipei, Dec. 1, 2003 (CENS)--Taiwan's food and beverage makers reported a total of 100 investment projects, worth US$336 million, in mainland China in the first 10 months of this year, up 3.5-fold from 53 cases and US$86.2 million registered one year earlier, according to the Investment Commission under the Ministry of Economic Affairs.

The production capacity expansion in the mainland by these food and beverage firms shows domestic food market is saturated.

According to statistics compiled by the Investment Commission, Guangdong Province absorbed the most of the investments launched by domestic food companies in the first 10 months of this year with 45 cases worth US$86 million, followed by Hebei Province, five cases worth US$68.6 million. In terms of cities and metropolis, Shanghai absorbed nine cases worth US$15 million.

Many domestic large-sized food companies, including Uni-President Enterprises Corp., Wei Chuan Food Co., I-Lan Food Co., Lian Hwa Foods Co., and Ten Ren Tea Corp., have successively landed on the mainland over the past few years. Of them, Uni-President grabbed NT$6.1 billion (US$179.41 million at US$1:NT$34) in sales in the mainland last year from total investment of US$344 million. The company expected it would see mainland revenues to surpass Taiwan's this year.

With long-term cautious evaluation, Hey-Song Food Corp., a specialist manufacturer of carbonated beverage, has recently pilot-produced and marketed its products in Shanghai on a trial basis. The company anticipated it would begin mass production of the product in Shanghai sometime next year.

Despite the expansion trend in the mainland, most domestic food firms still have tight grips on the domestic market. For instance, AGV Products Co. and Chou-Chin Industrial Co. are still making heavy investments in Taiwan with an attempt to explore new business opportunities in the matured domestic market.

According to statistics compiled by the Industrial Development Bureau under the MOEA, domestic food firms launched 19 new investment projects, valued at NT$5.5 billion (US$161.76 million), in Taiwan, in October alone. Of them, AGV recorded the most investment with NT$2.2 billion (US$64.7 million) to expand bacteria-free PET-bottled beverage production lines, which will be completed in 2007.

Other companies, including Wei-Chuan, Taiwan Tsing Tao Brewery Corp., Green Health Biotechnology Corp., and Hsiang Li Food Enterprise Co., have each invested over NT$200 million (US$5.88 million) in Taiwan, in October.

With investment of NT$238 million (US$7 million), Wei Chuan's Touliu plant in Yunlin County, southern Taiwan, completed production expansion of instant noodles in October. Taiwan Tsing Tao has invested NT$1.5 billion (US$44.11 million) to set up a plant in Kaohsiung County to produce beers, which is expected to be completed sometime in 2005.

Transforming itself into a biotechnology developer, Green Health plans to invest NT$700 million (US$20.58 million) to set up a plant in Tainan County, southern Taiwan, which is scheduled to be completed in 2006, to produce healthcare food, beauty and essential oil products.

Hsiang Li has set aside NT$216 million (US$6.35 million) to set up a plant in Tainan County to engage in frozen-pork processing.
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