Zhengchang looks toward expansion into South America, new opportunities at VIV Asia

In mid-March, I traveled to Bangkok to attend my first VIV Asia. The event, organized by VNU Exhibitions, featured 874 exhibitors and a robust conference schedule. By all accounts, it is the largest industry event in Asia. The 2015 edition’s attendance was up 15 percent – attracting more than 30,000 visitors from 120 countries.

Walking the show, the halls were packed; the booths were large and often featured some form of entertainment; and visitors bustled about with an eagerness to be introduced to the latest in equipment and animal nutrition.

VNU Exhibitions reported an increase in the attendance from visitors from SE Asian countries, such as India, Indonesian and Bangladesh.

Based on Feed International’s recent World Feed Panorama report, the Top 15 countries (including China, India, Japan, Indonesia and Korea) represent 72 percent of global production, with China being the world’s second largest compound livestock feed producer behind the United States.

When you look at the manufacture of compound feeds, a number of big players in feed manufacturing equipment dominate a large market share in many of the SE Asian countries. Chinese feed equipment manufacturer Zhengchang is one of these companies.

At VIV Asia, I sat down to discuss trends in Chinese feed production with Adams Lu, Zhengchang’s general manager assistant.


Chinese feed industry trends

As total Chinese feed production reaches nearly 200 million tons annually, but avian influenza has stunted further growth.

“The industry has experienced a little fluctuation the last two years, there’s less [poultry] production, but also the total manufacture of feed is much more reduced,” Adams explained. “Maybe two years ago, [China] had 10,000 feed mills, but at the end of last year, there are maybe only 6,000 still available.”

While some of the companies may have gone out of business, Adams attributed this trend mainly to consolidation.  

“The big groups now in China are very strong, they’re merge different companies,” he said. “They have a good supply chain from the raw material to the final product -- even to the supermarket — so they can control the profit, they can survive in the difficult time.”

In the future, he expects the total feed industry to reduce to 4,000 mills.

While Asia makes up the bulk of Zhengchang’s business, Adams identified Indonesia, Thailand, Bangladesh and Eastern European countries, such as Romania and Russian, as growth markets. He also said to watch African countries (Nigeria and Egypt) and South America.

Company developments

In 2015, Zhengchang established an operation in Brazil, the first company’s first location in South America. Prior it only had its factory in China and offices in other Asia countries, but it has never had a subsidiary company in an overseas market. 

In late April, the company will formally announce this news. 

In addition, via the Chinese government, Zhengchang is offering its foreign customers financing on its equipment — especially for the countries that face high-interest bank loans.

“The loan comes from the bank, but the [Chinese] government covers the risk, so the bank is willing to do this business,” Adams explained. 

Beyond this service, the company plan to role out a new innovation.

“China has already played a very important role in the food, feed and farming industries,” Lu said. “Since 1918, Zhengchang has already done a good job for its Chinese and overseas customers. We keep improving our products and services to enhance the brand.”

To this point, in June, Zhengchang will be making a major new equipment announcement for the piglet feed manufacturing market.