Tyson Enters Third Poultry JV in China

US - As part of its continuing international expansion, Tyson Foods Inc. has finalized a joint venture agreement involving vertically integrated poultry operations in eastern China.
calendar icon 11 September 2008
clock icon 3 minute read

Company officials reported that the agreement is with the Shandong Xinchang Group, one of China's leading poultry producers with estimated 2009 sales of US $345 million. Once the deal receives the necessary government approvals, it will give Tyson 60 per cent ownership in vertically integrated poultry operations consisting of Xinchang's existing assets and include the acquisition of a new poultry processing complex on the east coast of the Shandong Province. The name of the venture will be Shandong Tyson Xinchang Foods Company Ltd.

"Poultry is the second leading meat protein source in China behind pork and continues to make significant gains in consumption," said Rick Greubel, group vice-president and international president for Tyson Foods. "This joint venture will enable us to help meet China's appetite for poultry, which has been growing faster than the existing domestic supply."

Xinchang's business includes chicken and duck breeder and broiler farms, feed mills, and hatcheries. With the addition of a new chicken processing complex, the business also consists of four chicken processing facilities with a maximum capacity of three million birds per week and a duck processing facility capable of handling of 350,000 birds per week.

Most of the chicken and duck products are sold frozen through food-service and wholesale channels. A small percentage is sold through retail outlets under the Xinchang brand and under private label. In addition, some is exported. A majority of the sales are to customers in the region surrounding the Shandong province, which includes the cities of Beijing and Shanghai.

"It's our intent to expand the production and sales of these operations and use our extensive experience in the food industry to serve the rapidly growing quick service restaurant and modern retail food business in China," Mr Greubel said.

This will be Tyson's third joint venture poultry operation in China. The company also has majority interest in a chicken further processing facility in Zhucheng, Shandong, and majority interest in a vertically integrated poultry operation being developed in Haimen City in the Jiangsu Province near Shanghai.

China represented 9 per cent of the $3.8 billion Tyson generated in international sales in fiscal 2007.

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