(Source: South China Morning Post)
The Chinese-owned US pork supplier says the move is a further step in expanding its e-commerce and China businesses
Smithfield Foods, the Chinese-owned US pork giant, had signed a three-way agreement with JD.com, China’s second-largest e-commerce site, and Henan Shuanghui Investment and Development, to sell its pork products exclusively online on JD Fresh, JD.com’s fresh food division, said its parent company WH Group on Wednesday.
The move has highlighted the fierce competition between two of China’s largest e-commerce giants, JD and Alibaba, in the fresh food sector, with both of the companies investing heavily in smaller firms that specialise in manufacturing and processing fresh food products in recent years, as well as grabbing more food providers to diversify their offerings in this division.
While the agreement seems to be a victory for JD, WH Group said it also cooperates with Alibaba. Its packaged meat (both the Smithfield and Shuanghui brands) and Shuanghui’s fresh pork are sold on Alibaba’s online marketplace Tmall, according to Luis Chein, a director at WH Group.
“We don’t have a clear sales target for Smithfield pork sold on JD .com yet, but it won’t be a significant volume,” said Chein.
The Virginia-based pork supplier will sell more than 10 kinds of products on JD.com, and further cooperate on big data, cold-chain logistics and food traceability, according to the company statement. The products sold on JD.com will include bone-in cuts and variety meats, with a focus on small-packaged frozen products.
“These are all products which Smithfield specialises in, and include the types of products in highest demand in China,” it said.
Richard Liu, chairman and chief executive officer of JD.com, welcomed the partnership, saying it would provide easy access to high-quality pork products for more Chinese families.
“When it comes to food, and particularly a major staple of Chinese households like pork, this is even more critical,” he said.
WH Group acquired Smithfield in 2013 for US$4.7 billion, amid a quest by Chinese food companies for overseas assets as domestic consumers became increasingly wary about the safety of home-produced foods.
“Through this partnership, Smithfield Foods will take yet another step in developing its e-commerce business and expand its presence in China, as we meet consumers where they shop,” said Kenneth Sullivan, president and CEO of Smithfield.
Henan Shuanghui Investment and Development is majority-owned by WH Group and the exclusive domestic agent of Smithfield.
Shares of WH Group jumped 3.8 per cent in Hong Kong on Wednesday morning. The stock has added 11.8 per cent since October 25 last year.
(by Laura He, Jane Li)