The Thai giant – which is known locally in China by its Mandarin name Zheng Da - has signed an agreement with officials in Menyuan County, part of the Haibei region of Qinghai province.
The project will bring jobs and tax to one of China’s most impoverished regions, said Ma Ji Lin, head of animal husbandry/meat products at CP in China. Speaking at the signing ceremony with government officials, Ma said the project would also be a “demonstration zone” showcasing best practise in effluent management and environmental management.
Tighter environmental enforcement has made pig breeding sites harder to find in China’s populous regions, particularly on the southern and eastern coastline. The Qinghai project mirrors another CP project kick-started last year in Inner Mongolia, also one of China’s less populated regions, for a CNY3.6 billion investment which will ultimately produce one million pigs per year.
CP executives have been courting local officials in regions short on investment and jobs: Ma Ji Lin said Menyuan County had “excellent natural resources for agriculture” but suffered from a “thirty year investment gap” during which time other regions had gotten wealthy. Aside from jobs and taxes CP will also pay land transfer fees to acquire land from local farmers.
There are signs that CP will be bringing a lot more investment to Qinghai. The agreement for the 500,000 pig project was signed on the sidelines of an annual Qinghai investment and trade fair during which provincial government leaders met with top CP executives.
That meeting produced a “strategic cooperation agreement” between CP and the province, as reported by Qinghai TV news programmes. CP vice president Xie Bing was filmed telling local officials that his firm will share its technological and marketing know-how to advance the regional meat industry. Under the strategic cooperation agreement CP will train local university students in modern distribution, including online commerce.
In a separate meeting with the provincial governor earlier this year Xie said he wanted to help advance Qinghai’s location on the Silk Road under China’s One Belt Two Road blueprint to increase exports through infrastructure. That suggests the company may have plans to expand sales out of Qinghai to central Asia and the Middle East, which will be connected with Qinghai by rail under the plan.
With one of China’s least dense populations, Qinghai’s remote location in west China is suited for animal husbandry but its remoteness – it’s nearer to Nepal and to Kazakhstan than Guangzhou - puts it far removed from the dense and prosperous populations of southern China.
As China’s pig breeding sector consolidates local players are racing to open new breeding facilities, while complying with tighter environmental regulations that have seen mass closures of facilities in heavily populated southern areas like Guangdong province. High in nitrogen and potassium, untreated pig manure has been blamed for mass eutrophication of Chinese rivers.
CP is unique in China’s meat industry which is dominated by local firms, many of them state owned. Renowned for its strong connections to Chinese officialdom, CP is a big player in poultry in China while also supplying feed and operating major shrimp farms in the country. One of the very first investors into China after the country’s opening up in the late 1970s, CP has prospered in China thanks to the connections of long-time company boss and ethnic Chinese Thai billionaire, Dhanin Chearavanont, chairman and CEO of the Charoen Pokphand Group (CP).