China's largest single facility poultry operation started production last October some 12 months on from its ground-breaking ceremony. Operated by DaOSI -- a joint venture between the OSI Group and Doyoo Group -- the halal-certified plant will process 120 million birds annually.
Located in the Henan province, the DaOSI facility is OSI's third fully vertically integrated poultry operation in China, as this location joins those in the Shandong and Fujian provinces. The company is now on track to process 300 million birds per annum overall in China.
As a fully integrated operation, the site has 100 percent company-owned 35,000 square meter breeder and broiler farms, a hatchery and a feed mill capable of producing 800,000 tons of feed annually. It is located next to OSI Henan Foods, a new, wholly owned, Leadership in Energy and Environmental Design (LEED)-certified further processing facility built simultaneously by OSI. Since this further processing plant is located just across the road from the joint venture integrated poultry operation, it is able to utilize fresh instead of frozen poultry, reducing cost and improving the quality of finished products.
The Henan province is centrally located in China and is at the crossroads of the major North-South and East-West highways and railways. It is one of the most populated provinces in China with 104 million people, offering the double attraction for OSI of not only a ready market but also a plentiful labor supply. This latest addition to OSI's operations brings the company's coverage to the North, South and center of China.
Largest in Asia
OSI, which entered China in the early 1990s, has now invested more than US$750 million overall in its poultry operations in China. "In total, OSI Henan Foods will become the largest further processing facility for value-added meat in Asia," commented Brent Afman, senior vice president and managing director for OSI's Asia Pacific region.
The further processing plant will process poultry and beef products for chain account customers in China and also ship to some export markets. Phase 1 of the further processing plant will process par-fried and fully cooked chicken products and employ nearly 500 workers.
Staff training at the new plants is already well underway. With the company's existing operations in China and its Global Standard Operating procedures, OSI has been able to migrate its experience in food processing and quality standards to the Henan operation. For its poultry vertical integration, it is also working closely with the Doyoo Group to expedite training at existing locations.
Phase II of the further processing plant, which will be operational by 2016, will include additional high-speed lines and expand the plant's capabilities to value-added beef.
Designed to become OSI's largest food processing facility globally, the two-phase further processing facility will measure 55,000 square meters when fully completed. It is LEED certified -- one of the first such plants in China and the only meat processing facility with such accreditation.
The DaOSI slaughter plant will also be OSI's largest integrated poultry operation globally, spanning over 36,500 square meters.
The investment in the operations is in excess of US$300 million and in the further processing plants alone over US$125 million. By the end of 2013, the company will employ approximately 10,000 people across the Asia Pacific region.
Not for the fainthearted
Establishing new operations on such a large scale is not easy.
Brady Sidwell, vice president of corporate development and strategy for OSI APMEA, commented: "China is a market on the move, and not for the faint of heart, as the country has a number of complexities that continue to evolve. However, after 20 years in the marketplace, OSI has an experienced team and strong local relationships.
These factors help in both our depth of understanding and in navigating as the country transitions to a more modern, urban society."
The new facilities were built on a Greenfield site, where minimal infrastructure was in place. This blank canvas, with the help of OSI's local team, global engineering expertise and assistance from the local government, was turned into a state-of-the-art facility in only 12 months.
The company notes that the local government has been, and continues to be, of great importance in the success of the projects, with support coming in the form of various financial incentives, land acquisition, road building and connecting utilities, as well as in acquiring the necessary building permits and licenses to operate.
Commenting on OSI's strengthened focus in China, Dave McDonald, company president and COO, said: "We are investing a great deal in China and are quite appreciative of this growth. As you look at the world today, there is no other place growing as quickly as China. We feel fortunate to be part of that. We look at it as our No. 1 growth activity amongst all of our global activities.
"I think it has become a symbiotic relationship with China and the rest of the world: China needs the rest of the world and the rest of the world needs China. For our business portfolio, we were a bit underrepresented in Asia. This aggressive growth in China puts us in better balance. We depend on China's growth from a global standpoint."
In addition to these latest openings, OSI is also active through OSI Group (Weihai) Poultry Development Co. in the Shandong Province and SunOSI Poultry Development Co. in the Fujian Province. SunOSI is a joint venture with Chinese poultry company Fujian Sunner Development.
