According to Hormel, the plant in Jiaxing, a small city close to Shanghai where Hormel China is based, will produce a wide variety of products for retail and foodservice channels in China. It will also be the first Chinese plant to make SPAM, Hormel’s high profile canned meat product line, for the mainland Chinese market.
"China is very important to Hormel Foods. This new facility, which is wholly owned by Hormel, is needed for us to support the continued growth of our business and will allow us to continue our tradition of world class innovation, quality and safety," Swen Neufeldt, general manager at Hormel China, told GlobalMeatNews.
He added that a deep and talented local labour pool, efficient local government, as well as the advantaged geographical location allowing easy access to key cities in China’s relatively-wealthy Yangtze River Delta help explain why the company will invest in Jiaxing.
Hormel has developed an array of Hormel-branded products, including bacon, ham and sausages, to cater to Chinese tastes since it entered the market in 1994. It has so far established a mixture of wholly-owned and joint-venture entities in the country, which have become the "key growth driver" for its international business development, said Neufeldt.
Hormel’s move will tap into China’s growing demand for meat products due to its continuing urbanisation, as well as rising incomes in both urban and rural areas, according to a note from China’s ministry of industry and information technology (MIIT), which makes five-year development plans for all industries, including the meat industry.
However, this growing demand is facing some serious challenges, including poor manufacturing management, the death of a standardised cold chain network, and China’s notorious food safety issue, according to the MIIT.
Even multinationals who are supposed to have better management and stricter compliance requirements have fallen victim of food scandals. A good example is Hormel’s rival OSI, whose Shanghai operation last year was accused of selling expired meat products to KFC and McDonald’s.
Nonetheless, Hormel is confident about its own safety system. "We have strong quality programs throughout our supply chain and production process. Our programmes include audits of key suppliers. In addition to the audits, we have routine raw material testing and inspections programs in place," Neufeldt said.