Zhongpin will begin construction starting in April 2009 of a pork production facility in Tianjin City and a prepared meat facility in Changge City, Henan Province.
The new pork production facility, located in the Jinghai Economic Technical Development Area in Tianjin City, will increase total annual pork production capacity by 136,000 metric tonnes. The facility will be designed to process 100,000 metric tonnes of chilled and frozen pork products annually, of which 70% will be dedicated to chilled pork and 30% to frozen pork. The facility will also include annual production capacity of 36,000 metric tonnes of prepared meat products. This facility is expected to cost $52 million, excluding the investment in land use rights, and will be equipped mostly with state-of-the-art, imported equipment and machinery.
The construction of the new Tianjin facility will also include a new warehouse and distribution center, and a R&D center, which will improve Zhongpin's product portfolio, support cold chain logistics and effectively accommodate the newly added production capacity by facilitating efficient distribution.
The production lines for chilled and frozen pork products are expected to come online at the end of the first quarter of 2010 and will achieve its target utilisation rate at the end of the third quarter of 2010. The prepared meat production line and the new warehouse and distribution center are expected to come online by the end of the second quarter of 2010 and will achieve its target utilization rate at the end of the fourth quarter of 2010.
Without causing any interruption to its current marketing and distribution program, Zhongpin intends to terminate its lease at the existing Tianjin City facility after production at the new facility begins. With the addition of the new facility and closure of the existing facility in Tianjin City, Zhongpin's annual chilled and frozen pork production capacity will increase by 9%, reaching 545,760 metric tonnes from the current 498,760 metric tonnes.
"We are pleased to announce the next stage of our capacity expansion plan. While pork consumption has been temporarily impacted by the economic slowdown in China, our mid to long-term outlook for China's pork industry remains favourable. Government mandates designed to modernise the pork industry have hastened the transition from traditional wet markets to modern dry markets and we are optimistic that the RMB 4 trillion economic stimulus package will have a positive impact on the economy in the latter half of 2009," commented by Mr. Xianfu Zhu, Chairman of the Board and CEO of Zhongpin.