Companies

Nestle plans expansion in China

By Li Wenfang (China Daily)
Updated: 2011-05-25 10:22

DONGGUAN, Guangdong - The Swiss food and beverage giant Nestle SA expects to announce expansion plans in China in the coming months, after boosting its seasoning production capacity in Dongguan, Guangdong province.

On Tuesday, the company unveiled its plan to invest 320 million yuan ($49.2 million) to lift annual capacity at its instant food and seasoning factory in Dongguan from 15,000 tons to 40,000 by 2015.

"We are increasing our capacity rapidly in every category of our products," said Roland Decorvet, chairman and CEO of Nestle China. adding the company may announce more plans in the next few months.

The capacity of the factory could be ramped up to 100,000 tons in the next few years, he said.

Last month, Nestle China said it is acquiring a 60 percent equity stake in Yinlu Foods Group, a Chinese instant food company.

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"We are still waiting for approval from the Ministry of Commerce," Decorvet said, when asked to comment on the proposed acquisition.

Having set up 23 factories in China, Nestle is producing goods ranging from coffee drinks, dairy products, snacks and seasoning in the country - about 95 percent of these are sold in China.

Assuming his current position in March this year, Decorvet's priorities are to accelerate growth, achieve greater capacity and getting closer to local consumers.

The company generated 2.8 billion Swiss francs ($3.18 billion) in revenue in China last year, or a 12 percent increase from last year.

For this year, Nestle expects growth to exceed 20 percent on the Chinese mainland.

The seasoning division, which includes liquid seasoning and chicken essence, "can become a multibillion yuan business in China", Decorvet said.

He added that the company's chicken essence product category holds a share of more than 50 percent in the Chinese market.

To get closer to local consumers, Nestle will capitalize on its research and development centers in Beijing and Shanghai to generate more products specifically for the Chinese market, Decorvet said.

Nestle China will also "accelerate the recruitment of Chinese managers", he said, adding that expatriates who used to occupy general managerial positions at Nestle's factories in China 15 years ago have been reduced to two positions now.

Decorvet said the company has no immediate plans to increase the prices of its products in China. He attributed price increases to a supply shortages in emerging economies such as India and China, speculative investment and the production of biofuel.