Stretching its wings into international markets has been a key strategy for Springdale-based Tyson Foods Inc., which has spent almost 10 years developing partnerships among China's food industry, said Greg Lee, international president for Tyson Foods.
China represents a golden opportunity for American companies like Tyson Foods that are willing to take the risks. China, with its market of more than 1 billion consumers and an annual economy growing at double-digit rates, has a lucrative lure few companies can resist.
It is predicted urban spending on food among China's growing middle class will grow by 6.7 percent annually during the next two decades, making China one of the fastest-growing food markets in the world. Google the phrase "business in China" and you see more than 217 billion links of information, or you can find 5,872 books on the subject at Amazon.com.
But some business experts warn all that glitters isn't gold and expanding into China takes strategic planning. Tyson Foods has been conducting business in China for nearly a decade. With three separate joint ventures in pork processing, chicken processing and a pork casing plant, Tyson officials have said they hope to soon close the deal on a second poultry operation in China.
In 2005, Tyson Foods' sales to China from U.S. exports and Chinese national operations totaled $174 million, or 6 percent of the company's overall international sales.
While pork is the country's most consumed source of protein, chicken is the fastest-growing market, Lee said. He said the company is focusing on growing its chicken business within China both through exports to China and building a Chinese manufacturing base.
The company doubled the size of its chicken processing plant and last year opened the expanded facility. Lee said sales were going well, but the operation is still quite small, although the company is able to service both the food industry and retail sectors with products specifically tailored for Chinese consumption.
China-based operations is important because, according to Lee, to be a major player in China "you must be there and become part of the Chinese market, producing products specifically" for the Chinese market. "We can't expect to have a significant share of the Chinese protein consumption by solely relying on exporting products from the United States. It just isn't realistic," he said.
Key Tyson Foods customers, like KFC, McDonald's and Wal-Mart, have also been aggressively expanding into the Chinese marketplace. Wal-Mart's recent bid for 100 TrustMart stores in China would give the retail giant more than 200 stores by 2009.
Lee said Tyson Foods is already supplying product for both Wal-Mart and Trust-Mart in the retail sector from their China operations.Tyson Foods' expansion into China has been regional. Its need to be near grain has meant all of the company's processing facilities are located within the grain belt of the Shandong region, near the country's eastern edge.
"We hope to be able to develop some geographical diversity of manufacturing within China in the next several years to service a larger part of the Chinese marketplace," Lee said.
Tyson Foods reported sales worth $551 million to Asia in 2005 and its presence in China could give the company a base to export to other Asian countries.
Source:佚名