China's pig industry attracts century-old Dutch feed firm: newspaper

BEIJING, May 28 (Xinhua) -- Royal Dutch De Heus, a century-old Dutch feed firm, hopes to build a pig slaughtering and processing plant in China in cooperation with its Chinese partner Wellhope.

The plant is to be located in the outskirts of Fushun, Liaoning province, China Daily reported Tuesday.

Wellhope is a leading feed producer. De Heus bought a 15 percent stake in Wellhope for 150 million yuan (22 million U.S. dollars) in 2006, the paper reported.

This is probably one of the Dutch company's most successful investments because the initial investment has increased tenfold to nearly 1.5 billion yuan in 10 years, according to the report.

Moreover, the Dutch company has learned about integrated business operations from its Chinese partner, which is the key to accessing emerging markets in Asia worth hundreds of billions of dollars, the paper reported.

At first, the two sides differed on whether to expand the business.

Our success and failures in the past 100 years show that a company must focus on its main business instead of diversification, Co de Heus, CEO of Royal Dutch De Heus, was quoted as saying by the paper.

But times have changed. The total output of China's animal feed industry reached 181.3 million metric tons in 2018, the highest in the world for six consecutive years, according to the China Feed Industry Association.

It is difficult to keep investing in the feed market. With improvements in breeding technology and feed quality, the market will decline instead of increase, Jin Weidong, founder and chairman of Wellhope, was quoted as saying by the paper.

Unlike the fiercely competitive feed market, China has a huge demand for pork and chicken but fragile supply. Integrated operations mean increased sales and lower tax costs, he said.

The past year's success has proved Jin right as the broiler project is booming. Last year, the company's white feathered chicken produce ranked No. 1 in China and its chicken products entered KFC's supply chain and were exported to Japan, the paper reported.
Royal De Heus was surprised by the success of its Chinese partner and changed its development strategy. It acquired some European broiler production plants and expanded feed production projects into a whole-chain business in Southeast Asia, the paper reported.