Far East digest

Chinese GMO firm could face off against Monsanto in US

By RJ Whitehead

- Last updated on GMT

Photo: iStock
Photo: iStock
Origin Agritech is the latest Chinese agricultural biotechnology company to seek its fortunes overseas as a means to get round a local ban on genetically modified produce when it launches in America.

Though Beijing has encouraged significant investment in GMO research, it is yet to approve any major food crops for cultivation in the country.

To circumvent this reticence, Origin intends to begin operations next year in America, whose market is well accustomed to GMO production, according to details lodged with the the Securities and Exchange Commission.

Its chief financial officer, James Chen, told Reuters that it is currently deciding on which strategy to take, Chen said.

Since it began in 2005, Origin has invested more than RMB300m (US$46.90m) in biotech, and has listed in America. Its most advanced product is a corn with two traits that resist pests. If it enters the American market, it will find it dominated by agri-biotech giant Monsanto, Chen told Reuters.

"We think the technology has a fundamental value. Farmers are looking for alternatives to current products on offer​," he said.

The company’s most likely route to market would be by finding partners interested in licensing its traits to stack alongside others, though it would need regulatory approval to do so, which could take years. Alternatively, Origin could set up a standalone business unit in the country.

It is not the first company to look away from China. In a bid to circumvent domestic GMO regulations, China National Chemical Corp earlier this year attempted to acquire Swiss-based Syngenta for its biotech pipeline, though this ultimately failed due to regulatory concerns.

While Beijing is wary of public opinion that is squarely against it lifting its opposition to GMO crops, and keenly aware of the issues it faces in feeding its 1.4bn population, policymakers still see biotechnology as a means to boost the country’s agriculture.

The agri-biotech industry has been supported by the central government as an emerging sector of strategic importance. 

According to China’s 12th Five-year Plan, the country is meant to “speed up the innovation and application of biotechnology breeding in agriculture​,” and “foster a large and strong modern seed industry​”.

Nissin buys Jinmailang out of China noodle joint-venture

Nissin has ended its joint-ventures with Jinmailang so it can focus on supplying premium products to the Chinese market.

Noodles

The Japanese firm, which first developed instant noodles, sold its interests for RMB450m (US$70m) to Jinmailang to expand its Chinese business through local subsidiaries.

According to Euromonitor International, China's instant noodle market is worth RMB92bn (US$14.4bn), with Nissin’s low-single-figure market share seeing slow progress in gaining share over recent years.

According to Nissin financial statement earlier this year, its Chinese cup noodle sales were rising mainly in areas where its products had been newly introduced, as well as the eastern and southern areas of China where they are popular with younger consumers.

Li Yujing, a senior analyst at Mintel, told China Daily​ that the country’s instant noodle market had dropped in value over the past two years as consumers have become more health conscious. This, Li said, was the most likely reason behind Nissin's shift in strategy toward selling more of its own products.

She said there has also been a growing preference for foreign brands of instant noodles, particularly in the larger cities such as Beijing and Shanghai, which also bodes well for Nissin.

HK online food retailers to get new safety guidelines

Hong Kong’s food authorities have reacted to various food scandals this year by issuing new guidelines for online sales.

Online

Once the rules come into force in the first-quarter of 2016, online food businesses will be required to display business details on their websites and commit to ensuring proper storage temperatures during delivery.

The measures, tabled by the Food and Environmental Hygiene Department, will apply to all operators selling food without physical premises. They display their food licence or permit numbers, as well as a business address on all websites and publicity materials, when the new guidelines come into force.

All companies, including those with premises, will also be required to maintain proper storage temperatures during the delivery of online purchases.

Online food sales have been under the spotlight this year, especially after more than 80 people fell ill after eating Taiwanese Horng Ryen Jen sandwiches, some of which were ordered online.

Some quarters of the online food industry have reacted strongly against the guidelines. Speaking to South China Morning Post, Suki Cheung, who runs 88 Food Express, an online food trader, said it was “impractical​” to deliver all food in refrigerated vans. 

"How many refrigerated vans are there in Hong Kong?The cost is three times higher than ordinary trucks,​” she said, adding that her company would normally use dry ice packs in unrefrigerated vans.

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