Uni-President Enterprises(2?@) and Japan's Kikkoman, the world's largest soy sauce manufacturer, yesterday unveiled plans for an US$11 million soy sauce factory in China, but industry watchers said the venture faces a harsh battle ahead.
Uni-President and Kikkoman will each own a 50 percent stake in the new enterprise. The two firms set up President Kikkoman in Taiwan a decade ago to make and sell soy sauce to local consumers. Today, the joint company has the third largest share of the domestic market after Kimlan Food (
"Kikkoman has very advanced soy sauce brewing technology, while Uni-President's knowledge of the China market can help Kikkoman expand markets overseas," a Uni-President executive said.
The companies' new venture will be based on the same relationship the two have pursued together in Taiwan.
As soy sauce demand in Japan has been drying up, Kikkoman -- which holds a 30 percent share of its home country's US$2 billion market -- has been expanding overseas, hoping to turn things around. The company now has factories in the US, Singapore, and Holland.
"The overseas operation could be the key to the company's future," a Kikkoman officer told foreign media.
The Uni-President executive said that the two firms have been talking about a joint venture over the past three years. "We are carefully making an assessment of the China market," he said.
When asked how the new venture will compete with other manufacturers based in China, the executive responded, "We are still talking with our partner about our strategy."
The new factory will begin selling soy sauce in 2001. According to Kikkoman, it will generate annual sales of ?200 million in the first year and ?1 billion within a decade.
According to Uni-President, China's soy sauce market is around 10 billion yuan.
However, industry insiders are not optimistic about the new venture's short-term prospects.
"Taiwan manufacturers are having a difficult time running soy sauce businesses there. All of them are losing money in China," said an officer from a local food manufacturer, which also owns a soy sauce factory in China.
According to local manufacturers who operate China-based factories, soy sauce there is "chemically made," extremely low in quality and cheap, while Taiwan manufacturers produce a soy sauce that is high quality and "naturally brewed."
"I do not think most China consumers can afford to buy high-quality soy sauce yet. It will probably take another five to 10 years for them to accept it," an official from Kimlan Food said, adding that his company already has a soy sauce factory in China.
An officer from another local soy sauce company expressed similar skepticism about the China market.
"I am not sure it is a good time to enter the market because the demand for high-quality soy sauce is really very small in China now," he said.
"Well-known multinational companies such as Uni-President and Kikkoman are very unlikely to produce very low-quality products because it will affect their images."
He further noted that it is difficult for Taiwan manufacturers who are accustomed to producing high-quality soy sauce to switch to low-quality sauce.
"It is hard for us to move down to the low-end market after producing high-end products for years," he said.
However, Uni-President is determined to push ahead with its plans, even though it has has lost NT$1 billion from its other investments in China already.
"This is part of Uni-President's China investment plan," the Uni-President executive said.
The executive said soaring labor costs and Taiwan's small market has forced the food giant to shift the production of many products to China.
Currently, the company has nearly 20 factories in China, making noodles, animal feed, oil, flour and other products.
The new venture will be the first soy sauce production factory in China for both Uni-President and Kikkoman.
Taiwan has arranged for about 8 million barrels of crude oil, or about one-third of its monthly needs, to be shipped from the Red Sea this month to bypass the Strait of Hormuz and ease domestic supply pressures, CPC Corp, Taiwan (CPC, 台灣中油) said yesterday. The state-run oil company has worked with Middle Eastern suppliers to secure routes other than the Strait of Hormuz, through which about 20 percent of the world’s oil and liquefied natural gas typically passes, CPC chairman Fang Jeng-zen (方振仁) said at a meeting of the legislature’s Economics Committee in Taipei. Suppliers in Saudi Arabia have indicated they
A global survey showed that 60 percent of Taiwanese had attained higher education, second only to Canada, the Ministry of the Interior said. Taiwan easily surpassed the global average of 43 percent and ranked ahead of major economies, including Japan, South Korea and the US, data from the Organisation for Economic Co-operation and Development (OECD) for 2024 showed. Taiwan has a high literacy rate, data released by the ministry showed. As of the end of last year, Taiwan had 20.617 million people aged 15 or older, accounting for 88.5 percent of the total population, with a literacy rate of 99.4 percent, the data
CCP ‘PAWN’? Beijing could use the KMT chairwoman’s visit to signal to the world that many people in Taiwan support the ‘one China’ principle, an academic said Chinese Nationalist Party (KMT) Chairwoman Cheng Li-wun (鄭麗文) yesterday arrived in China for a “peace” mission and potential meeting with Chinese President Xi Jinping (習近平), while a Taiwanese minister detailed the number of Chinese warships currently deployed around the nation. Cheng is visiting at a time of increased Chinese military pressure on Taiwan, as the opposition-dominated Legislative Yuan stalls a government plan for US$40 billion in extra defense spending. Speaking to reporters before going to the airport, Cheng said she was going on a “historic journey for peace,” but added that some people felt uneasy about her trip. “If you truly love Taiwan,
NEW LOW: The council in 2024 based predictions on a pessimistic estimate for the nation’s total fertility rate of 0.84, but last year that rate was 0.69, 17 percent lower An expected National Development Council (NDC) report expects the nation’s population to drop below 12 million by 2065, with the old-age dependency ratio to top 100 percent sooner than 2070, sources said yesterday. The council is slated to release its latest population projections in August, using an ultra-low fertility model, the sources said. The previous report projected that Taiwan’s population would fall to 14.37 million by 2070, but based on a new estimate of the total fertility rate (TFR) — the average number of children born to a woman over her lifetime — the population is expected to reach 12 million by
RSS