While Tongwei seeks to expand its feed business in Southeast Asia, the firm’s Tongwei Foods unit has also been busy rolling out the ‘Zui Ya Jian’ packaged meat snacks range onto shop shelves around China.
The ‘Zui Ya Jian’ (translated as ‘ivory tooth’) brand range features spicy Sichuan style poultry and pork favourites, as well as packed pre-cooked sachet type packs by Chengdu Qing Mai Su Food Products Co (a Tongwei subsidiary).
The range includes a 300g Sichuan style sliced sausage pack at CNY33.80 as well as dried, smoked pork at RMB42.80/300g. Poultry offal appears to be a major draw for Tongwei consumers: 162 gram duck gizzard at RMB29.90. The Zui Ya Jian range also features 96 gram packs of dried, flavoured duck tongue at RMB39.90 as well as duck neck (RMB19.90 per 165 gram pack) and duck feet (RMB21.90 for a 172 gram pack).
While western style hams and sausages have become more common on Chinese chilled supermarket shelves, more local flavours remain in favour in smaller cities and towns. Promising consumers “healthy and safe” products, Tongwei has launched a range of brands and subsidiaries from meats to imported salmon to tap rising Chinese consumer spending. In 2017 the group put into production what it claims is Asia’s most modern pet food processing plant, putting out a ‘CarePet’ range of canned and packaged meat products for China’s booming pet sector.
The firm, which has operations in Southeast Asia as well as China, grew revenues by 24.9% year on year to RMB26.08 billion in 2017. Net income rose 96.3% in the same period to RMB2.01 billion. The firm saw similarly robust growth in 2016 when it lifted annual revenue to RMB20.8 from RMB14.07 billion (in 2015).
Tongwei recorded revenues of RMB14.9 billion from feed sales in 2017, while its processed foods divisions contributed RMB1.13 billion – less than half the revenues from the newer Tongwei polysilicon (for solar panels) business which contributed RMB3.22 billion in revenue and also contributed the highest growth rate of any company division last year, growing 56%. Solar power installations contributed RMB.79 billion of Tongwei’s overall revenues.
As it enters the downstream end of the market, Tongwei’s geographical reach should be an advantage – the firm has, since the 1980s, built up networks of distributors across China’s regions to handle its animal feed products. Independent distribution networks are lacking in many other smaller meat firms which have instead focused on particular regions.
Tongwei has long had ambitions to compete with Thai agri conglomerate Charoen Pokphand (CP) in value-added and higher-margin businesses like packaged food and retailing as well as feed and livestock production. Fewer firms are as large and influential in China’s agriculture or aquaculture business as Tongwei Co, one of China’s top 100 enterprises by revenue, according to the company. The conglomerate has businesses right across the field, from feed companies to real estate, fish farming and solar energy.
With a market capitalisation of RMB41.5 billion and 20,000 employees, Tongwei has become a favourite of investors due to its recent financial performance. Yet Tongwei remains a relative minnow next to the firm it clearly seeks to emulate, CP: the Thai giant recorded overall revenue of USD45 billion in 2016, compared to USD4.14 billion that same year for Tongwei Co Ltd. However Tongwei has since 2006 entered the solar power industry, producing and installing solar panels to tap expected global demand.