Jun. 26, 2013
Establishing a Flour Business Joint Venture in Vietnam
Sumitomo Corporation (Head Office: Chuo-ku, Tokyo; President and CEO: Kuniharu Nakamura) has signed the relevant agreements with CJ CheilJedang Corporation (Head Office: Seoul, South Korea; CEO: Kim Chul-ha, hereinafter “CJ”), a major food company based in South Korea, on the joint establishment of a firm that will manufacture and sell flour and baking pre-mix products in the Vietnamese province of Ba Ria-Vung Tau.
CJ is a member of the CJ Group, which was originally founded in 1953 as the first manufacturing business of the Samsung Group and then spun off from the conglomerate in 1993. Starting out as a sugar refinery, the CJ Group has expanded its food business to become the leading player in South Korea’s food industry, manufacturing and distributing a broad range of food ingredients and other related products ranging not only from flour & flour mix, cooking oil, seasonings, packaged food and processed meat but also to pharmaceuticals and animal feed. In addition, the enterprise entered into other industries from the 1990s, like logistics and multimedia (which includes TV shopping and filmmaking) to become one of the country’s top-tier diversified conglomerates.
In response to soaring food demands evident in the burgeoning markets of emerging economies, Sumitomo Corporation has been seeking an opportunity to advance into the primary grain-processing sector, focusing its search mainly on Asia. With huge growth potential, Vietnam is counted among the most promising markets, particularly in Southeast Asia, given its growing population, which is expected to exceed 100 million in the coming decade from the current 90 million. As Western lifestyle is likely to become a majority of the Vietnamese diet, the demand for essential ingredients such as flour and related products is expected to increase. To enter this rising market, Sumitomo Corporation has found an ideal partnership in CJ, the strategy of whom perfectly matched each other. Under this joint-venture, the two enterprises will take full advantage of their respective strengths with the aim of winning a substantial share at the earliest possible time. Sumitomo Corporation brings to the partnership the flour sales know-how it has accumulated in the Vietnamese market. CJ, meanwhile, with more than 55 years experience in flour milling business, provides its operational excellence and know-how of manufacturing and R&D competence in the state-of-the-art flour milling technologies for producing high-value-added products with a primary focus on high-end food ingredients of such as seafood-based and bakeries products.
Following this joint-venture, the two enterprises are enhancing their partnership by extending the collaboration to diversify to other food products sectors in Vietnam. To do this, They will bring together their strength of various areas, which includes the grain harvesting/storage and frozen dough business, where Sumitomo Corporation has established in Australia, and CJ’s animal feed operation in Vietnam. Furthermore, Sumitomo Corporation will consider the possibility of introducing primary grain processing projects in other emerging Asian markets like Myanmar, Cambodia and Laos with CJ. By playing a vital role in building an integrated value chain stretching from grain harvesting and flour milling to the manufacturing and distribution of products, Sumitomo Corporation will contribute to improving the global lifestyle with the aim of ensuring a safe and high-quality food supply.
|<Profile of the new company>|
|Company name||:||CJ-SC GLOBAL MILLING LLC (Planned)|
|Address||:||Ba Ria-Vung Tau, Vietnam|
|Total Investment Amount||:||USD44,000,000.-|
|Ownership ratio||:||CJ CheilJedang Corporation 51%, Sumitomo Corporation Group 49%|
|:||production, distribution, sales and exports of wheat flour and flour premix and other products in/from Vietnam|
|Beginning of operation
(wheat milling capacity: 500mt/day -> 160,000 mt/year)
Vice President of CJ(Right) and Executive Vice President, General Manager of Media,
Network, Lifestyle Related Goods & Services Business Unit Shinichi Sasaki of
Sumitomo Corporation signed an agreement
Image of Production Plant in Vietnam