Chinese feed equipment manufacturer discusses industry trends

Animal Feed for Thought

Jackie Roembke, editor of Feed Strategy magazine, offers her perspective on happenings in the global feed and grain industries.

Zhengchang looks toward expansion into South
America, new opportunities at VIV Asia

In
mid-March, I traveled to Bangkok to attend my first VIV Asia. The event,
organized by VNU Exhibitions, featured 874 exhibitors and a robust conference
schedule. By all accounts, it is the largest industry event in Asia. The 2015
edition’s attendance was up 15 percent – attracting more than 30,000 visitors
from 120 countries.

Walking
the show, the halls were packed; the booths were large and often featured some
form of entertainment; and visitors bustled about with an eagerness to be introduced to the latest in equipment and animal
nutrition.

VNU
Exhibitions reported an increase in the attendance from visitors from SE Asian
countries, such as India, Indonesian and Bangladesh.

Based
on Feed International’s recent World
Feed Panorama report, the Top 15 countries (including China, India, Japan,
Indonesia and Korea) represent 72 percent of global production, with China
being the world’s second largest compound livestock feed producer behind the United States.

When
you look at the manufacture of compound feeds, a number of big players in feed
manufacturing equipment dominate a large market share in many of the SE Asian
countries. Chinese feed equipment manufacturer Zhengchang is
one of these companies.

At VIV Asia, I
sat down to discuss trends in Chinese feed production with Adams Lu, Zhengchang’s general
manager assistant.

Adams-Lu-Zhengchang

Chinese feed industry trends

As
total Chinese feed production reaches nearly 200 million tons annually, but
avian influenza has stunted further growth.

“The
industry has experienced a little fluctuation the last two years, there’s less
[poultry] production, but also the total manufacture of feed is much more
reduced,” Adams explained. “Maybe two years ago, [China] had 10,000 feed mills,
but at the end of last year, there are maybe only 6,000 still available.”

While
some of the companies may have gone out of
business, Adams attributed this trend mainly to consolidation.

“The
big groups now in China are very strong, they’re merge different companies,” he
said. “They have a good supply chain from the raw material to the final product
— even to the supermarket — so they can control the profit, they can survive
in the difficult time.”

In
the future, he expects the total feed industry to reduce to 4,000 mills.

While Asia makes
up the bulk of Zhengchang’s business, Adams identified Indonesia, Thailand, Bangladesh and Eastern European countries,
such as Romania and Russian, as growth markets. He also said to watch African
countries (Nigeria and Egypt) and South America.

Company
developments

In 2015, Zhengchang established
an operation in Brazil, the first company’s first location in South America. Prior
it only had its factory in China and offices in other Asia countries, but it has
never had a subsidiary company in an overseas market.

In late April,
the company will formally announce this news.

In addition, via
the Chinese government, Zhengchang is offering its foreign customers financing on its
equipment — especially for the countries that face high-interest bank loans.

“The loan comes
from the bank, but the [Chinese] government covers the risk, so the bank is
willing to do this business,” Adams explained.

Beyond this service, the company plan to role out a new innovation.

“China
has already played a very important
role in the food, feed and farming industries,” Lu said. “Since 1918,
Zhengchang has already done a good job for its Chinese and overseas customers.
We keep improving our products and services to enhance the brand.”

To this point, in
June, Zhengchang will be making a major new equipment announcement for the piglet
feed manufacturing market.