The deal will see Singfood spending S$17.2 million (€8.38m) on the stake, which the company says will allow China Delisi to tap into QAF's strong international links with suppliers and producers in the food industries, particularly in Singapore, Malaysia and the Philippines. The aim is that exports to overseas markets will enhance the status of China Delisi's products in the eyes of PRC consumers and raise the image of the company.
Further to this, QAF says that the proposed investment will provide it with a solid base and a ready made customer network for the expansion of its food business in PRC. This is in line with the company's policy of growth through strategic acquisitions as well as the strengthening and expansion of its proprietary brands.
With China's population only just staring to shift its meat consumption away from the traditional wet market towards chilled meats bought from supermarkets and other larger format stores, analysts currently view investments in large scale meat processors as having great potential.
Although the segment remains fragmented, localised and largely unmodernised, the sector is on the cusp of significant change. This is partly fuelled by the fact that, with per capita meat consumption in China currently running at around 45 kgs - less than half the rate found in the US - and incomes levels growing all the time, the capacity for significant increase in demand is great.
Currently large scale meat processors make up a tiny fraction of total meat processing capacity in. However, China Delisi is one of those few exceptions, it currently has over 20,000 points of sales throughout 20 provinces, cities and autonomous regions, including Shandong, Jiangxi, Shanghai, Zhejiang, Inner Mongolia, Beijing, Tianjin, Hunan, Henan, Fujian and Guangdong.
In FY2003, sales in the China market accounted for 97.5 per cent of its total sales, and the remaining 2.5 per cent is attributable to export sales to countries such as Hong Kong and Russia. Its total sales and net profit after tax 2003 of China Delisi Group were approximately RMB 541.7 million and RMB 62.0 million respectively.
Based in Zhucheng, Shandong Province, the main activities of China Delisis centre aournd the production and sale of low-temperature meat products, fresh chilled meat and quick-frozen convenience food. Its meat products comprise mainly smoked products, stuffed sausage products, steam-cooked products and traditional Chinese products.