South Korea’s leading catering service Samsung Welstory Inc. joined hands with Japan’s largest food wholesaler Kokubu Group Corp. and China’s state-owned agricultural company Shanghai Yinlong Agricultural Development Co. to create a joint venture in a bid to capture the gigantic food market in China.
According to Samsung Welstory on Thursday, the Korea catering service inked an agreement with Kokubu Group and Shanghai Yinlong Agricultural Development to establish a joint venture specializing in food distribution in China. The joint venture, to be named Shanghai Welstory Food, will be set up with a capitalization of 28.5 million yuan ($5 billion). Samsung Welstory will own 70 percent stake while the rest will be held by the Japanese and Chinese entities with 17.5 percent stake and 12.5 percent stake each.
Kokubu Group is the largest food distributor in Japan with annual sales of 1.6 trillion won ($14 billion) and has run the low-temperature food distribution business in China since 2010.
Shanghai Yinlong Agricultural Development is a subsidiary of China’s Shanghai Jinshan State-Owned Asset Management Bureau and has focused on producing and processing agricultural products since 1993. Its farm produces are especially known for their excellent qualities that it is named as the top 10 vegetable brand in China.
Samsung Welstory, food arm of Korea’s largest conglomerate Samsung Group, is a wholly-owned subsidiary of Samsung C&T and entered the Chinese catering service market in 2012. Though the joint venture that it is creating together with Kokubu Group and Shanghai Yinlong Agricultural Development, the company plans to provide meals to cafeterias affiliated to itself first then expand its business to other restaurants at China’s state-owned entities and Japan-based firms in China.
This year the Korean food service provider will concentrate its efforts in successfully establishing the joint venture and hopes to grow the business to generate 170 billion won in sales by 2020 from the food distribution business in China alone, the company said.
“China’s food distribution market is an enormous market, amounting 300 trillion won as of last year,” said an unnamed Samsung Welstory official.
Samsung Welstory is the second Korean company that has made inroads to China’s food distribution market after CJ Freshway Corp. that entered the Chinese market last year.
By Seo Jin-woo
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]