DENMARK, Randers. The company's first processing plant in China has not gotten the desired start. Changed assumptions in the collaboration with Alibaba-owned WinChain now lead to a change of strategy.
The road to the Chinese dinner tables seemed to be open to Danish Crown when a year and a half ago, an agreement was signed with WinChain to take over all production from the newly built processing plant in Pinghu outside Shanghai. Unfortunately, reality has turned out to be another. WinChain has not reduced the agreed quantities, so after a longer period an agreement was reached to discontinue the cooperation.
“WinChain is financially challenged, so even though we had a good contract, it didn't make sense to continue the collaboration. Instead, we have set a turbo on building a sales organization in Shanghai, and fortunately there is great interest in working with us,” says Søren Tinggaard, director of retail and foodservice in China.
Danish Crown's factory in Shanghai is less than 100 km from the center of Shanghai. It is 17,000 m3 and is built to produce up to 14,000 t of fresh and processed products annually. So far, focus has been almost exclusively on producing for the retail and the 80 million consumers in and around Shanghai, but as part of a new sales strategy, sales will now be targeted to the foodservice segment.
Tinggaard has even moved to Shanghai to be very close to both the customers and the production. At the same time, Jesper Colding, who has worked in China and Asia for a number of years, has been appointed chairman of the board of directors of Danish Crown's Chinese company. In the short term, Tinggaard and his team are working to get agreements in place that can ensure a production at the minimum level that was entered into the agreement with WinChain. However, the factory can produce significantly more, so there is also a huge potential in getting Danish Crown positioned as a premium brand in China. The Pinghu factory only processes and packs Danish pork.