NESTLE SA is likely to close its ice-cream factory in Shanghai by the end of this month as the company consolidates its business in China, a person with the knowledge of the matter said yesterday.

The company's two other ice-cream factories in Guangzhou in south China and Tianjin in the north would not be affected, the source who preferred to be unnamed told Shanghai Daily. He added the company may soon start talks with employees of the Shanghai factory over the closure.

Nestle issued a statement saying that it continuously reviews its ice cream operations and adjusts where necessary in order to ensure long-term viability.

"Should such a review lead to a necessary business adjustment, information would be shared at the appropriate time with the parties involved," according to the statement.

"Ice cream is an important component of Nestle's product offering in China. Nestle is fully committed to build a long-term sustainable ice cream business in China and significant investments are being made."

Nestle CEO Paul Bulcke earlier said the company plans to get 45 percent of revenue from developing countries by 2020, up from a third now, according to Bloomberg News.

According to Euromonitor, China's ice cream market was valued at 30.8 billion yuan (US$4.8 billion) last year.

Inner Mongolia-based Yili boasted a market share of 15.8 percent, Mengniu took 13 percent, Unilever, which makes Wall's branded ice cream, was No. 3 with 6.9 percent, and Nestle had 3 percent last year.

In July, Nestle paid US$1.7 billion for a 60 percent stake in Chinese confectionery company Hsu Fu Chi International Ltd and it acquired Shanghai Fuller Foods Co in 1997.

Source:chinesestock