CP to boost investment in China on three fronts
Almost B6bn on hand for spending this year
bangkokpost.com
Somporn Thapanachai
Chairman Dhanin Chearavanont is flanked by CP Group executives at the conglomerate's BoI Fair pavilion. -- Sarot Meksophawanakul <see link for picture>
With more confidence in the economic recovery throughout Asia, the Charoen Pokphand Group has resumed investing in China after a two-year pause.
The conglomerate would focus on three areas: retailing, vehicles and beverages, committing nearly six billion baht in new capital this year, executives said yesterday.
Two billion baht would go toward doubling the number of Lotus Supercentre stores in Shanghai to eight, said Thanakorn Seriburi senior executive vice-president of the CP Group.
"The market in this province is very favourable for more investment with a local population of 15 million and approximately two million visitors a day," he said.
Average daily sales of the four existing Lotus branches are around five million baht each.
The new outlets will be joint ventures with Chinese government enterprises, or they will be managed on a contract basis.
As well, CP has resumed construction of its Chia Tai Mall after a one-year suspension brought on by financial problems. Mr Thanakorn said the Shanghai local administration had loaned US$125 million to help support the project. As a result, CP needed only $50 million from eight Thai banks led by Thai Farmer Bank.
The $330-million project was started in 1996, with Koll International Corp, a California developer, as the main consultant. The 12-storey mall, including three floors underground, will be the most modern mall in China after completion in April next year.
CP plans to open another Lotus Supercentre on the site and is discussing leases with international department stores. Half of the 240,000 square metres have already been leased.
Mr Thanakorn said the new mall would feature the best food and crafts from every province in China in one place.
During the 1997-98 crisis, CP had sold interests in several businesses in China in order to raise cash. It sold 35% of the Shanghai Mila Brewery to its partner, Heineken MV of the Netherlands. It also sold off a motorcycle plant in Shanghai to Chinese partners, leaving only a plant in Luoyang.
"But this year, the situation has turned upside-down," said Mr Thanakorn, who is responsible for non-agricultural business in China which produced turnover of $3.93 billion last year and is expected to grow by 10% this year.
The group will also increase production of its Ta Yang brand motorcycles to 500,000 units this year, 400,000 from the Luoyang province plant and the rest from a new $100-million factory in Guangdong.
Although the company had sold off its stake in the Heineken brewery, it has not turned its back on the industry. Instead, it has joined Thailand's Boon Rawd Brewery and Siam Commercial Bank to brew Wan Li beer for Chinese customers in Guanxi province. The brewery now produces 80,000 tons of beer and will increase to 100,000 tons, two-thirds of full capacity, next year.
In agricultural businesses, Mr Thanakorn said CP would focus on improving management efficiency to international standards in order to strengthen the group for China's entry to the World Trade Organisation.
The group aims to run all 104 of its animal feed factories at full capacity, up from 75% at present. It will also strengthen its poultry-raising business and later introduce the farming of tabtim, a kind of Nile Tillapia fish, to Chinese farmers.
CP planned other ambitious aquaculture ventures outside of China, said Pong Visetpaithoon vice-president of CP Foods Co.
In Vietnam, the company is building a 400-million-baht shrimp feed plant in Ho Chi Minh City to produce 2,000 tons a month of feed for the local market. "Vietnam's potential for shrimp farming is very bright, with demand for 1,000 tons of feed from Thailand each month," Mr Pong said. Construction will be completed by June.
CP's livestock and aquaculture feed businesses accounted for 40% of CP Foods' annual revenue of 50 billion baht.
Mr Pong said active markets were also foreseen in India and Indonesia where CP has investments in shrimp feed factories. |
