China beef firm posts strong performance
Listed in both Shanghai and Shenzhen, Fortune Ng Fung Food (Hebei) Co feeds and slaughters beef cattle, processing meat for local supermarkets while also processing mutton and dairy goods.
The firm has credited demand for processed beef products, as well as strong demand for dairy cattle and dairy goods, for the results.
While beef prices have been rising dramatically in China – up to a 10-year high of RMB74/kg in wealthy southern cities like Guangzhou earlier this year – firms like Fucheng have also attempted to capitalise on equally strong demand for dairy goods, by importing and breeding cows. Fucheng, meanwhile, has also sought to grow through its exposure to catering sales.
According to Fucheng’s end-of-year work meeting, reported on its website, 2013 earnings have also been buffeted by improved cost controls and disposal of real estate.
Known also for its restaurant chain of the same name, the firm last month announced that it completed the acquisition of majority stakes in two restaurant chains in Beijing and Chengdu respectively – a move that seems to fit the firm’s highly integrated model of beef production, which includes feed lots and cold chain logistics operations. Packaged Fucheng beef products sell in supermarkets in Beijing and other northern Chinese cities.
Based a two-hour drive from Beijing in the city of Langfang, the firm competes with a handful of other major players, including Henan Yisai Beef Co, Mongolia Kerchin Cattle Industry Co and Shenyang Lufeng in supplying China’s growing demand for beef – a demand that has been crimped by a shortage of cattle.
Company founder and chair Li Fucheng likes it to be remembered that he started out as a small farmer, borrowing RMB5,000 in 1986 to purchase seven cattle.
He later joined forces with Inner Mongolia Cereals Oils & Foodstuffs Import & Export Co and Hong Kong-based Ng Fung, part of the China Resources state conglomerate, to dominate live cattle exports to Hong Kong.
However Fucheng’s original aims to be a major exporter of cattle and processed beef to Asia and the Middle East have been displaced as domestic demand for beef rockets.