Certified-organic beef using local breeds is the business model of industrialist Lu Xing, who breeds local Luxi and Yellow cattle on feed lots in the easterly province of Shandong.
He claims to make up to RMB130,000 (US$20,800) in retail sales of his carcases –that’s six times more per beast compared to non-organic cattle.
A larger range of cuts and products is also key to the profitability of the ‘Ao Shi Da’ brand of beef products. The range is produced by a subsidiary of the Jin Ming Group, which Lu chairs in Gaotang, a township of Liaocheng city in Shandong on China’s east coast.
Lu invited media to the plant recently to showcase the company’s range of gift boxes and colourfully-packaged meat which is sold in first-tier cities like Beijing and Shanghai.
Securing organic certification for animal products is difficult in China, given a lack of land to produce truly organic feedstuffs. Key to securing the organic certification is a 200-hectare plot of land where Lu grows feed for his herd.
“We’re 100% organic from feed to processing,” he explained. Aside from being organic, Lu said he had studied how US beef processors have a higher range of products and cuts.
A tour of US cattle lots a decade ago convinced him of the potential for well-managed beef farms in China, he said.
He initially bred Angus bulls with local breeds. Today he kills crossbreeds, plus Luxi and Yellow steers in a processing plant housing RMB60m-worth of Stork-branded processing equipment, imported from Holland.
The explosion of online commerce portals like JD.com and Yihaodian.com has enabled brands such as Ao Shi Da (translated from Mandarin the name sounds like ‘Australian Star’) to bypass supermarkets and target middle-class consumers directly.
Lu’s entry into the organic beef market, meanwhile, is evidence of the continued lure of China’s meat trade to the country’s cashed-up industrialists. He also has interests in real estate and machinery manufacturing and lately also started to sell organic rabbit meat.
The Ao Shi Da brand also has global ambitions. While Lu said the firm currently ships to 10, mostly Asian, countries, he claimed a broader market would open up in the future, particularly since the firm also has (Chinese) halal certification.