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CHINA SET TO IMPROVE STANDARDS OF NATIONAL HOG SLAUGHTERING INDUSTRY YURUN POISED TO TAKE ADVANTAGE OF INDUSTRY CONSOLIDATION
(14 January, 2010, Hong Kong) China Yurun Food Group Limited ("Yurun Food" or "the Company", and together with its subsidiaries, the "Group" (SEHK: 1068), a leading vertically-integrated meat-product processor and supplier in China, states that the issuance and further implementation of the "Framework for National Hog Slaughtering Industry Development Plan" ("Framework") will expand the scale of the consolidation for national hog slaughtering industry and bring strong growth impetus for Yurun Food, a leading enterprise in the Chinese meat products industry.
According to the Framework issued by the Ministry of Commerce on 31 December, 2009, the government will strictly control the number of slaughtering factories for the purpose of maintaining the hygienic and quality standards of meat products. As a result, the level of industry consolidation will be raised, and the development of branded operation and the technology and management level in the industry will be enhanced. Specifically, 30% of outdated manual and semi-automated slaughtering plants will be eliminated by 2013 and will further expand to 50% by 2015, with major cities and developed areas determined to eliminate about 80% of slaughtering plants which do not meet hygienic standards. At the same time, the implementation of a nationwide classification system for slaughtering facilities is to be sped up, with plants being ranked into various categories. Higher ranked facilities equate to a higher level of enterprise technology, management skills, product quality and wider distribution abilities. As a result, leading enterprises will be promoted while outdated ones will be gradually eliminated, and the hygienic standards of production in slaughtering plants will be enhanced, as well as development of a strict quality control system of meat products.
In addition, the industry consolidation will optimize the structure of meat products, improving the current situation of high ratios of fresh pork as compared to chilled pork, and high temperature meat products as compared to low temperature meat products. The sales ratio of small packaged meat in regions above county level are targeted to rise from the current 10% to 15%; and the market share of chilled pork from 10% to 20% in 2013; and the above ratios to reach 20% and 30% respectively by 2015 in order to gradually promote the customers to expand their demand for modernized meat products.
Mr. Zhu Yicai, Chairman of Yurun Food, said, "We believe that the implementation of measures outlined by the "Framework for National Hog Slaughtering Industry Development Plan" will accelerate the integration of the national hog slaughtering industry, significantly reducing outdated production capacity which will ultimately benefit leading enterprises such as Yurun Food. Furthermore, the policy is advantageous to the Groupí»s two core businesses, chilled pork and low temperature meat products, which will drive the Group's continuous growth."
Mr. Zhu added, "In recent years, we have taken diligent steps to be well prepared for industry consolidation. We have proactively established our expansion plans in order to achieve comprehensive nationwide capacity coverage, and continued to build up our businesses in terms of production capacity, human resources, branding and marketing so as to capture any arising opportunities. As the industry develops, we are confident in achieving new heights in respect of scale of production, brand recognition, sales and food quality management, so that we can further increase our market share and continue to serve as the industry leader."
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