Cambodian VP in China to tackle meat import reliance

By Mark Godfrey

- Last updated on GMT

Hor Namhong wants Cambodia to scale back imports. Image courtesy of the Russian Ministry of Communication
Hor Namhong wants Cambodia to scale back imports. Image courtesy of the Russian Ministry of Communication

Related tags: World trade organization

One of China’s top meat-focused conglomerates could be about to expand its reach in south-east Asia.

New Hope Group, a company with interests in feed, pigs and poultry, has been hosting the Cambodian vice prime minister on a high-profile visit to its facilities.

During his visit to New Hope plants and facilities in the south-westerly province of Sichuan, Hor Namhong said Cambodia was seeking to increase its meat processing capacity as the country remains too reliant on meat imports.

His country needs “full value chain​” investment in its pork, poultry and beef sectors, said Hor. “The Cambodian people’s demand for meat is rising,​” said Hor in a statement – produced by New Hope – from his meeting with Yang Li, head of the company’s Sichuan office and group vice-chair Zhang Ming Gui.

A close political ally of China, Cambodia is a market for New Hope duck meat, while the firm also runs a feed plant near Phnom Penh. Hor also visited New Hope laboratories in Chengdu, a visit covered prominently by the local press.

Cambodia: a tough market

New Hope​ put its feed plant into operation in 2010. However, Thai conglomerate Charoen Pokphand​ (CP) is the number one player in Cambodia’s feed market, where another player is Vietnam’s Green Feed.

By any standards Cambodia is a challenging market: the lack of rural electrification and low availability of finance in rural areas, as well as patchy logistics and infrastructure, have all hindered businesses in what is also one of the region’s most corrupt countries.

While it has long focused on feed production, New Hope has been keen in recent years to enter more high-margin activities, such as packaged meat sales, and the firm has pledged significant investments in overseas beef and lamb operations for sale back into China. During his tour of Sichuan facilities, Hor saw a showcase of New Hope’s many consumer-facing meat brands, such as Mei Hao and Jia Hao.

Poor wages impact consumption power

With 80,000 workers on its payroll and production of nine million breeding pigs and hogs per year, New Hope makes much of its investment in breeding, technology and international expertise. That makes the company a regional player fit to compete with CP for dominance in south-east Asia.

Speaking to GlobalMeatNews​, an executive at a western feed supplements supplier to New Hope said the firm was seeking to internationalise its markets as well as its sourcing. “Cambodia is near to China and, with a free trade agreement in place and rising wealth [in Cambodia], it’s easy to see the attraction.​”

There is a limit to consumption power in Cambodia where factory workers are paid about US$150 a month – less than half the average industrial wage in China. Nonetheless, with a population of 15 million, Cambodia has been the focus of attention from Japan and South Korea, both of which have built factories to avail themselves of cheaper labour.

Faced with rising pork prices at home, due to increasingly stringent environment rules on pig farming, China has been increasing its pork imports. Cambodia and China have free trade access to each others’ markets through a free trade deal between Beijing and the Association of Southeast Asian Nations (ASEAN).

China is the biggest source of tourists and investment, according to Cambodian official statistics. Factory complexes, built hastily by Chinese garment companies, line the roads into the capital, part of a flurry of investment and construction since prime minister Hun Sen took the country into the World Trade Organisation in 2004.

Cambodia has become a dependable voice for China in south-east Asia, especially in blocking a unified regional voice against China’s claims to the South China Sea.

Listed among the world’s top five animal feed companies by sales, New Hope has 265 subsidiary companies and 10 million tons of feed, but has expanded significantly in poultry in recent years. New Hope also has subsidiaries focused on finance and investment, as well as real estate and chemicals, according to filings made for its listed arm, the Qingdao New Hope Liuhe Co.

Related topics: Industry & Markets, China, Others, Poultry, Pork

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