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Zhongpin Leases Yet Another Pork Facility

by 5m Editor
2 January 2009, at 9:43am

CHINA - Zhongpin, a meat and food processing company, has entered into an agreement with Jilin Huazheng Agriculture and Animal Husbandry Development Company to lease a pork production facility in Gongzhuling, Jilin province, China. Zhongpin plans to move part of its chilled and frozen pork production capacity to Jilin province.

According to Zhongpin, the newly-leased facility has an annual chilled and frozen pork production capacity of approximately 30,000 metric tons. Zhongpin plans to use about 70 per cent of the capacity for the production of chilled pork products and the remaining 30 per cent for frozen pork products, reports Datamonitor.

Zhongpin's management has decided to terminate in mid-January its lease for Zhongpin's existing chilled and frozen pork facility in Hailun city, Heilongjiang province, which has an annual capacity of 28,800 metric tons for chilled and frozen pork products. This facility was initially leased to facilitate the company's export business due to its convenient access to an export port to Russia.

However, Zhongpin has now shifted its focus to the higher-margin domestic market as the strategic value of this facility has declined. As a result of the new lease and the termination of the existing lease, the total annual capacity of chilled and frozen pork products will be 418,760 metric tons after the transition is completed. Following termination of the lease agreement, Zhongpin's subsidiary, Heilongjiang Zhongpin, will be transitioned into a trading entity, focusing on market development and cold chain logistics in northern China.

Xianfu Zhu, CEO of Zhongpin, said: "We believe that the decision to strategically relocate a portion of our chilled and frozen pork capacity will benefit our future growth. We have observed that China's domestic demand for high-quality pork products has been relatively unaffected by the global economic crisis, as compared with overseas markets, which validates our deliberate focus on the domestic market and bodes well for our continued success."