Samsung Welstory to Launch China-based Food Distribution Network

Samsung Welstory (President & CEO Bong-Yung Kim) has signed an agreement that will see it establish a food distribution joint venture operation with Kokubu, Japan’s largest food distributor, as well as Chinese agriculture company Yinlong Agriculture Development (Yinlong Agriculture).

Samsung Welstory, Kokubu and Yinlong Agriculture will hold 70 percent, 17.5 percent and 12.5 percent respectively of shares in Shanghai Welstory Food (上海悦思意食品有限公司), with total capital investment amounting to KRW 5 billion.

Kokubu is Japan’s largest wholesale food supplier, with yearly revenues of KRW 16 trillion. Since its entry into the Chinese food distribution market in 2010, the company has secured an advanced logistics infrastructure in China. It also boasts expertise in low-temperature food distribution networks.

Yinlong Agriculture is a specialized agricultural product company that makes up part of the state-owned Shanghai Jinshan Capital Management Group. It has focused on cultivating and processing local agricultural products since 1993.

Vegetables grown by Yinlong Agriculture are held in great esteem in China, where the company is rated as one of the top 10 vegetable producers.

Samsung Welstory has accumulated considerable food distribution knowledge and quality management capabilities from its Korean operations. The company plans to combine Kokubu’s logistics infrastructure with Yinlong Agriculture’s high-quality agricultural product supply capabilities to maximize business synergies, providing optimum conditions for entry into the Chinese food distribution market.

Through its business hub in Shanghai, the company is planning to build on its catering operations, which began in 2012, and expand into the food distribution business by first supplying its own catering sites across China. Looking forward, the company plans to strategically target state-owned companies and Japanese companies in China with more stringent food quality requirements.

The size of the food distribution market in China was approximately KRW 300 trillion at the end of 2015, and is expected to experience rapid growth at an annual average rate of 9.2 percent until 2020.

With an increasing number of global companies entering the Chinese food distribution market – still in its early stages of development – competition amongst local companies is becoming fierce.

As a pioneer, Samsung Welstory is aiming to become a market leader, and plans to use this partnership as an opportunity to achieve its goals in the rapidly growing Chinese food distribution market.

A signing ceremony for the joint venture took place at the Jinshan Convention Center on June 22 with Bong-Yung Kim, president and CEO of Samsung Welstory, Kokubu Akira (國分晃), president of Kokubu and Jin Yong Jun (金永均), chairman of Yinlong Agriculture, all in attendance, as well as some 20 executives from the three companies.

Bong-Yung Kim said, “The partnership venture, equipped with excellent business capabilities from the three companies involved, could grow into a much-loved company in China. We hope it will contribute to the advancement of the Chinese food distribution industry.”

Samsung Welstory is a wholly owned subsidiary of Samsung C&T Corporation. It is Korea’s top catering service company, and last year recorded sales worth KRW 1.73 trillion. It continues to expand its overseas business, after having made inroads into the Vietnamese market in 2015, following its entry to the Chinese catering service market in 2012.

Currently, Samsung Welstory supplies 120,000 meals per day to 44 different sites in China, and 180,000 meals per day to 28 different sites across Vietnam. The company is targeting KRW 800 billion in sales from its overseas operations by 2020 and envisions growing into a global food and beverage company.

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