Food firm gets taste for growth

Com­pany, that also spe­cial­izes in en­ergy and equip­ment, brings its ex­per­tise in fi­nance, tech and in­no­va­tion to a clutch of in­dus­tries across the world

China Daily (USA) - - BUSINESS - By ZHONGNANin Shen­zhen zhong­nan@chi­nadaily.com.cn

China’s spe­cial­ist equip­ment maker CIMC EN­RIC Hold­ing Ltd will con­tinue merg­ers and ac­qui­si­tions in de­vel­oped coun­tries as part of its ex­pan­sion into mar­kets along the Belt and Road Ini­tia­tive.

The en­ergy, chem­i­cal and liq­uid food equip­ment com­pany is a ma­jor sub­sidiary of China In­ter­na­tional Marine Con­tain­ers (Group) Ltd, the coun­try’s largest trans­porta­tion equip­ment pro­ducer by rev­enue.

In June, the sub­sidiary bought out the United King­dom-based Briggs Group Ltd, a food equip­ment provider, for 23 mil­lion pounds ($28.6 mil­lion).

CIMC EN­RIC’s tech­nolo­gies are ex­pected to dou­ble Briggs’ rev­enue as well as profit over the next five years.

This is the third food equip­ment busi­ness that CIMC EN­RIC ac­quired in Europe. The pre­vi­ous two pick­ings have seen sub­stan­tial lo­cal­iza­tion of their op­er­a­tions, which ben­e­fited their do­mes­tic mar­kets.

Yu Ji­amin, CIMC EN­RIC’s di­rec­tor for strate­gic devel­op­ment, said the in­dus­try world­wide had been up­grad­ing.

The “Make in In­dia” cam­paign is also ex­pected to shake up the global man­u­fac­tur­ing sec­tor. So, tra­di­tional mass pro­duc­tion of low-end goods, prod­ucts and tools can­not meet the new de­mands of the global man­u­fac­tur­ing sec­tor.

“Chi­nese en­ter­prises need to ab­sorb ex­cel­lent re­sources from global brands through over­seas M&A and build core strengths in brand­ing, tech­nol­ogy and tal­ent rather than low-end man­u­fac­tur­ing; up­grade tech­nolo­gies faster; and lo­cal­ize global op­er­a­tions,” said Yu.

The trade, ser­vice and in­fras­truc­ture net­work pro­posed by the Chi­nese govern­ment in 2013 en­vi­sions a Silk Road Eco­nomic Belt and a 21st Cen­tury Mar­itime Silk

Mex­ico.

Road, cov­er­ing about 4.4 bil­lion peo­ple in more than 60 coun­tries and re­gions in Europe, Asia and Africa.

Coun­tries along the Belt and Road Ini­tia­tive, in­clud­ing Viet­nam, South Korea, Mon­go­lia, Nige­ria, An­gola, Ethiopia and Rus­sia, are key to CIMC EN­RIC as it in­creases its in­vest­ment in mar­ket­ing and re­source in­te­gra­tion over the next five years.

The Chi­nese com­pany will de­ploy more re­sources in the ASEAN re­gion, South Amer­ica and the do­mes­tic­mar­ket to com­pete with other es­tab­lished ri­vals in these fast­grow­ing mar­kets.

“We don’t sim­ply ship prod­ucts or in­tro­duce tech­nol­ogy, but ac­quire global ad­vanced re­sources like man­age­ment ex­per­tise, tech­nol­ogy, tal­ent and brands through M&A, to make the com­pany ef­fi­cient and ef­fec­tive in glob­al­iz­ing our busi­ness,” Yu said.

Ding Lixin, a re­searcher at the Chi­nese Academy of Agri­cul­tural Sci­ences in Bei­jing, said it is rea­son­able for do­mes­tic beer and bev­er­age equip­ment sup­pli­ers to seek new op­por­tu­ni­ties in emerg­ing mar­kets for sus­tained and sus­tain­able growth.

For ex­am­ple, mar­kets in the ASEAN re­gion, Brazil and Nige­ria are not af­fected by cold weather con­di­tions be­cause of their geo­graphic lo­ca­tion. Lars Ring,

The Briggs deal will likely pro­vide CIMC EN­RIC with ef­fec­tive re­sources such as dis­till­ing and yeast for non­brew­ing in­dus­tries, and boost ef­forts to build ca­pa­bil­ity in the non-brew­ing equip­ment sec­tor, he said.

CIMC EN­RIC’s sales rev­enue was 8.24 bil­lion yuan ($1.22 bil­lion) in 2015, with 26 per­cent of it com­ing from its liq­uid food equip­ment busi­ness.

So, the Briggs deal is key, and will give the com­pany about 30 per­cent mar­ket share in the global brew­ing en­gi­neer­ing equip­ment and make it one of the world’s three big­gest sup­pli­ers.

“The grow­ing de­mand for beer and bev­er­age prod­ucts in coun­tries along the Belt and Road Ini­tia­tive will bring more choices to con­sumers to choose lo­cal beer or drink brands, as they have bet­ter and more op­tions to pick prod­ucts that they think are cheaper, safer and bet­ter in taste, in­stead of only se­lect­ing beer prod­ucts from de­vel­oped mar­kets,” Ding said.

Ea­ger to en­hance its earn­ings from the do­mes­tic mar­ket, the com­pany be­gan op­er­a­tions in Septem­ber at its new brew­ery projects. It in­stalled a mash fil­ter, brew­house, cold area and a big tank sourced from a top brewer in Baod­ing, in He­bei prov­ince.

The com­pany also in­vested in an­other brew­ery project in Jishui, Jiangxi prov­ince, phase I of which be­gan op­er­a­tions re­cently.

The two projects en­tailed in­vest­ments of 2 bil­lion yuan and 1.6 bil­lion yuan re­spec­tively. They will to­gether yield 1 mil­lion met­ric tons of beer and 2 bil­lion yuan in sales an­nu­ally upon full com­ple­tion by Zie­mann Holvrieka Asia Co Ltd.

The lat­ter is the Asian pro­duc­tion base of Zie­mann and Holvrieka, which spe­cial­ize in en­gi­neer­ing, pro­cure­ment and con­struc­tion or EPC projects, a com­mon form of con­tract­ing in the con­struc­tion in­dus­try.

Zie­mann andHolvrieka are two brands of liq­uid food equip­ment in­dus­try which have been ac­quired by CIMC EN­RIC from Ger­many, the Nether­lands, Bel­gium and Den­mark in 2012 and 2009, re­spec­tively.

Zie­mann and Holvrieka so far have de­liv­ered more than 120 brew­ing EPC projects in 33 coun­tries and re­gions, in­clud­ingMon­go­lia, Sin­ga­pore and Pa­pua New Guinea. They have seven re­search and devel­op­ment cen­ters in Asia and Europe and plan to build more mar­ket­ing net­works in coun­tries along the Belt and Road Ini­tia­tive.

“The most ob­vi­ous op­por­tu­nity is the mod­ern­iza­tion of bev­er­age and food sup­ply chains. That is a big area and there are lots of in­vest­ments go­ing on there,” said Lars Roed, gen­eral man­ager of Zie­man­nHolvrieka Asia.

Roed said the de­mand for beer, milk, yo­gurt, juice and soft drinks will also of­fer new growth points for equip­ment and in­gre­di­ent busi­nesses.

“We have seen lots of po­ten­tial in this sec­tor, not only in China, but in many dy­namic emerg­ing economies,” he said.

In ad­di­tion to over­seas mar­ket ex­pan­sion, CIMC EN­RIC is also work­ing with its key cus­tomers in var­i­ous coun­tries to de­liver in­no­va­tion in ar­eas such as key equip­ment and turnkey en­gi­neer­ing ser­vices for dis­til­la­tion, phar­ma­ceu­ti­cals, yeast and bio­fu­els.

The most ob­vi­ous op­por­tu­nity is the mod­ern­iza­tion of bev­er­age and food sup­ply chains.” gen­eral man­ager of Zie­mann Holvrieka Asia

PRO­VIDED TO CHINA DAILY

An em­ployee of Zie­mann In­ter­na­tional GmbH, a sub­sidiary of CIMC EN­RIC, ad­justs equip­ment at a beer brew­ing project in

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