Juice Maker eyes North American Orchards

Company plans to use mergers and acquisitions to expand overseas
BEIJING - Shaanxi Haisheng Fresh Fruit Co Ltd, the largest producer of apple-juice concentrate in the world, is planning to buy fruit orchards in the United States and Canada to expand its presence overseas, said a company official.
"It (the purchasing plan) is part of our strategic business transformation," said Li Rong, director of capital operations of the company. "We are looking for possible opportunities to use mergers and acquisitions to own fruit plantations in North America. And we aren't excluding opportunities to work on deals involving fruit-juice processing and distribution overseas if they are good enough," she said, declining to elaborate.
Nearly 15 years after Haisheng was established, the company was capable in 2010 of churning out 405,000 tons of apple-juice concentrate. That feat came following a series of investments in expansion at home and abroad, making the company the largest processor and provider of the concentrate.
In 2010, Haisheng's annual exports accounted for 25 percent of the nation's total exports and 25 percent of world trade in apple-juice concentrate.
Among its current clients are some of the best known companies in China and abroad: China Huiyuan Juice Group Ltd, the largest juice maker in China, Pepsico Inc and Coca-Cola Co, the largest beverage producers in the world.
In 2005, Haisheng was listed on the Hong Kong Stock Exchange.

"While we have gained a firm foothold in the global market, we are preparing for a strategic business transformation," she said. "The first step will be to develop the industrial upper chain through merger and acquisition deals overseas.
"We are discussing buying fruit orchards in the US and Canada."
Haisheng already has a strong presence in the US. The company set up a sales office there in 1998 and has become the largest provider of apple-juice concentrate in the American market, supplying 30 percent of the country's demand for juice.
"Now is a good time for us to develop our upstream business in North America, where the land is fertile and comparatively cheap," Li said.
Haisheng has a strong presence in other countries as well. It supplies 9 percent of the Europe Union's demand for juice, 46 percent of South Africa's and 29 percent of Russia's.
"We will also see if there are opportunities to expand overseas in the processing and distribution of fruit juice," she said.
The company has been trying to expand through acquisitions.
In 2010, Haisheng acquired Yitian Group, the China-based juice business of Japan's Itochu Corp, for $10.38 million
Under the agreement, Itochu will help Haisheng sell and distribute fruit juice products in Japan. The acquisition is expected to help Haisheng's production capacity increase by 15 percent, and the Chinese provider's market share in Japan is expected to increase to 40 percent from 8 percent.
Despite those successful acquisitions, Chinese companies still face difficulties in acquiring land overseas.
The government of Iceland recently rejected a proposal from the Chinese billionaire investor Huang Nubo, who wanted to buy 300 square kilometers of land on the northern part of the island for $200 million.
Explaining its rejection, the government said such a transfer of property would be "incompatible" with the country's laws.
China Daily

(China Daily 12/20/2011 page16

Unity is the key for China's top private firms

A new chamber of commerce has been established to help companies challenge in foreign markets
BEIJING - Some of China's largest private companies have decided to unite to develop overseas markets, as an increasing number of them aspire to develop into global players.
The China International Chamber of Commerce for the Private Sector (CICCPS) was established in Beijing on Thursday. It has more than 100 members, including some of the country's biggest private companies, such as Geely Automobile Holdings Ltd, the auto giant that bought Sweden's Volvo AB last year, and New Hope Group Ltd, China's largest producer of animal feed.
The aim of the CICCPS is that private companies will help each other in overseas investment, including the provision of coordination between domestic and foreign government agencies, and in setting up platforms to obtain financing.
"Internationalization has become the strategy for many Chinese companies," said Zheng Yuewen, chairman of the organization. "They need to develop on a global scale and be internationally competitive."
The country's 7.5 million private-owned companies have become a major force in overseas investment. In the next three years, one-third of them will set up sales networks overseas and a quarter of them will establish offices in other countries, according to Guo Guangchang, chairman of Fosun International Ltd, one of China's largest conglomerates.
The private enterprises might also be able to benefit from China's vast foreign-exchange reserves when making overseas investments, according to some members. So far, the foreign-exchange reserves - totaling more than $3 trillion - have mainly been used to aid the overseas expansion of State-owned companies.
"The investment of our foreign-exchange reserves should be more diversified, and private business is an important channel," said Wu Xiaoqiu, director of the Financial and Securities Institute of Renmin University of China.
"Private companies have more advantages in their decision-making systems, and they are also better at executing plans compared with State-owned enterprises," said Wang Jianxi, executive vice-president and chief risk officer of China Investment Corp, the country's sovereign wealth fund.
The overseas development of Chinese private enterprise has already attracted foreign investors. In July, the British financier Jacob Rothschild said that his RIT Capital Partners will set up a private-equity fund of $750 million with members of the CICCPS to aid the development of Chinese companies overseas.
Many of the country's private enterprises compete with each other at the low-end while doing business overseas, said Yin Mingshan, chairman of Lifan Industry (Group) Co Ltd, a leading motorcycle manufacturer. "They compete by offering the lowest price possible, and hurt each other as a result. Joining the chamber will make them more self-disciplined," he said.
China Daily
(China Daily 11/25/2011 page15)