Charoen Pokphand Foods (CPF) is on its way to becoming number one worldwide in both feed-meal and integrated shrimp production after acquiring subsidiaries in China and Vietnam from parent firm CP Pokphand Co (CPP).
Through CPP, the company will be able to manage more feed meal in China and shrimp farms in Vietnam. This move is part of the company's strategy to revise its business structure towards more synergy and competitive costs.
CPF has been following five key goals:
- to feed more than 3 billion people,
- to be the leading corporate in the Asia-Pacific region,
- to be the world's top or second-biggest producer of feed meal,
- to become the world's biggest integrated shrimp-farm operator, and
- to strengthen its market capitalisation and earnings to shareholders.
This month, CPF will hold a shareholders' meeting to seek support for the US$2.17 billion-acquisition of CPP, through which CPF will be able to manage more feed meal in China and shrimp farms in Vietnam, The Nation reports.
If the acquisition is approved, CPF will double its total sales to THB 300 billion (US$ 9.3 billion) in 2012 and experience an average annual growth of 15-20% in 14 countries, plus boost its food-processing, feed-meal and farming businesses.
The parent company would keep markets such as Burma, Cambodia and Indonesia and some food businesses in China, Bangkok Post reports.
Adirek Sripratak, president and CEO of CPF, said the company is also pushing to access countries with burgeoning economies such as Russia, India and the Philippines. It also targets promising economies in South Asia by focusing on feed meal and aquaculture.
"The approval from the shareholders [to acquire CPP] will immediately [allow us to] double our sales this year, and sales are expected to grow by an average of 15-20% through the next five years. Our revenue ratio between the domestic market and export will also change from 70:30 currently to 40:60 within the next five years,” Adirek said.
Thailand as trading and distribution centre
China's gross domestic product has risen by an average of 10% annually for more 10 years with a 1.4-billion population, while Vietnam has a 6-7% GDP growth with 88 million people.
"Even if we keep growing at this rate we will not be able to feed the population of Asia for the next 20 years. We will grow with the growth of the region," Adirek commented.
While CPF wants to help Thailand become a trading centre and distribution hub of CP brand products, it said China and Vietnam also have great potential as trading and distribution bases for export in the next decade.
Adirek said each country has its own exploitable advantage; for instance, Thailand will be the manufacturing centre for shrimp products and Vietnam will focus on freshwater-fish products because it has the best potential to become the worldwide leader within the next five years.
The feed meal will be distributed under various brands while food production will function under the policy of a single CP brand.
CPF is setting up Asia as its manufacturing and marketing base for the region while business networks in the United States and the European Union will be its trading hubs for business expansion.