CP Group halts new China investment
Thailand's Charoen Pokphand Group will make $132 million in new investment this year, but China, one of its biggest markets, is not on the list.
Thailand's Charoen Pokphand Group will make $132 million in new investments this year, but China, one of its biggest markets, is not on the list. The decision was probably a result of slower growth in the country, experts say.
Thirty years ago, the CPG became the first foreign business allowed to invest in China. But now, other countries head the expansion list. In particular, the CPG will invest 2.5 billion bakht (US$73 million) in Russia, Turkey, India, Malaysia, Laos and the Philippines in the coming year.
The company plans to build a new 500 million bakht (US$15 million) chicken processing facility in Turkey. In India, the company will invest 500 million bakht in a livestock feedmill and in a hatchery, the company said in a statement June 8.
"CP Group does not continue investing in China due to its slow growth here," Guo Huiyong, analyst at Beijing Orient Agribusiness Consultant Ltd., told Poultry International's Coco Liu. "But the company can benefit from rising meat demand and less competition in Southeastern Asia and Eastern Europe."
Local feed producers, like the Sichuan-based New Hope Group, have already caught up with the CPG in China's feed market.
The NHG is estimated to produce 10 million tons of feed in 2008, which is the same as the annual feed production of CPG's China plants, according to Guo.
In addition, some of the company's China subsidiaries actually lose money.
"Heilongjiang-based Chia Tai Co. Ltd. for example, an integrated broiler joint venture in North China, lost 100 to 200 million yuan last year," said Guo.
CPG, known as Chia Tai Group in China, currently owns 213 subsidiaries in China with 30 billion yuan (US$4.4 billion) in annual sales revenues, according to the company.