Nissin Foods forges strategic alliance for China growth
HONG KONG, NNA - Nissin Foods Co. will start importing and selling a much wider range of Japanese food products in China from the second quarter of 2020 after forming a joint venture with a local partner.
Nissin will own an 81 per cent stake with an investment of $2.4 million (HKD 18.6 million) while Liu Feng, the founder of Deng Feng Group and director of Dachang Dongfeng Food (Shanghai) Co., will own the remaining 19 per cent of their new holding company in Hong Kong.
The joint venture (JV) will set up a "PRC Wholly Foreign-Owned Enterprise (PRC WFOE)" in Shanghai. The JV and the PRC WFOE will import and sell a comprehensive range of Japanese brand food and beverage products in first-tier Chinese cities including Shanghai.
Nissin Foods gave the JV details in a filed statement dated Jan. 23 to the Hong Kong Exchanges and Clearing Ltd. Dachang Dengfeng Food was chosen as a partner in the strategic alliance as it has been trading in Japanese products.
A statement said the joint venture will enable Nissin to expand distribution channels and offer more diversified products to satisfy the growing demand in China for Japanese food and beverage products. The move will also create synergies with Nissin's existing noodles business in China.
Executive director Kiyotaka Ando, who is also chairman and CEO of Nissin Foods, said, “Formation of the JV is the group’s latest initiative to diversify products and expand distribution channels in the PRC, and in the long run open new revenue streams for the group. It will give us a stronger foothold in Shanghai, presenting us with long-term strategic value conducive to creating sustainable returns for our shareholders. It is also part of our localisation efforts to strengthen our presence and relevance in the PRC."
He added, “In the way ahead, we will continue to look for opportunities in strategic partnerships or alliances, thereby fueling growth momentum.”
The Japanese food group may purchase any or all of the shares held by Liu Feng by the end of 2023, according to their agreement.
Nissin Foods has many popular product brands including Cup Noodles, Demae Iccho ramen, Doll instant noodle, Fuku noodle and Doll Dim Sum. Its product portfolio also includes snacks, food sauces and mineral water.