Jollibee to build commissary in China

MANILA, Philippines - Fastfood giant Jollibee Foods Corp. (JFC) is building its first commissary in China through a joint venture with Singapore firm Hua Xia Harvest Holdings Pte. Ltd. that will require both parties to invest a total of $7.4 million.

In its disclosure to the Philippine Stock Exchange, JFC said its wholly-owned unit Jollibee Worldwide Pte. Ltd. signed an agreement with Hua Xia Harvest to undertake food manufacturing operations to supply products for the restaurants of the Jollibee Group in China – initially Yonghe King for its stores in Shanghai and Beijing.

A new company – Jollibee Foods Processing Pte. Ltd. – was formed in Singapore with the Philippine fastfood firm taking a 70-percent interest while the balance of 30 percent will be held by Hua Xia Harvest.

The joint venture intends to invest a total of 50 million renminbi (approximately P338 million) in the facility, inclusive of the cost of the acquistion of the land use right. Construction of the facility, located in Shucheng County in Anhui province in China, is targeted to start in the next few months while production is expected to begin in 2011.

Anhui ranks among the top provinces in China in the production of agricultural products.

JFC currently has no commissary in China and depends on third party suppliers for its products supply.

Under the agreement, the new company will obtain a land use right over a parcel of land with an area of around four hectares for a usage term of 50 years.

The Jollibee group currently operates to w businesss in China – Yonghe King with 177 stores located mainly in Beijing, Shanghai, Shanzen and Wuhan regions, and Hong Zhuang Yuan with 49 stores all located in Beijing. It will also own 55 percen of San Pin Wang, a restaurant chain with 34 stores in Nanning, Guyangxi province in South China by early 2011 based on the joint venture agreement it entered into in April 2010.

As of end-June this year, JFC had a total of 1,584 stores in the Philippines: Jollibee (700), Chowking (408), Greenwich (223), Red ribbon (214), Delifrance (24) and Manong Pepe’s (15). Overseas, it had a total of 357 stores – Yonghe King (177); Jollibee (60) mainly in the US (25), Vietnam (17) and Brunei (11); Red Ribbon (36) all in the US; Chowlking (35) mostly in the US (18) and Dubai (15), Hong Zhuang Yuan (49) for a total of 1,941 stores worldwide.