Golden Wing Mau and Joyvio, two leading players in China’s fresh fruit business, are merging their operations.
The ‘strategic merger’was announced at a press conference in Beijing with Joyvio’s parent company Legend Holdings this morning (16 December).
Chairman of New Zealand kiwifruit marketer Peter McBride, chairman of Subsole Miguel Allamand, Capespan Group chief financial officer Andrew de Haast and Hortifrut chief strategy officer Ricardo Larrain all attended the launch event, as well as president of the Chinese Association of Agricultural Commodity Markets Zhang Yuxiang.
Speaking exclusively to Asiafruit, Golden Wing Mau’s president and CEO Liu Mau Wah said the merger creates “China’s largest fresh fruit business” with combined annual sales of RMB5bn (US$775m).
“Golden Wing Mau and Joyvio share a common vision to be the top Chinese fruit company with global influence, providing safe, high-quality and flavoursome fruit to Chinese consumers and promoting the sound and sustainable development of China’s fruit industry,” he said.
“After the merger, we will become stronger in many ways, including our financial power, technical capabilities and combined experience. The merger will help us to create a fully integrated value chain, and extend our influence and market share in the industry.”
The merger received Chinese government approval on 7 December, with the partners hopeful of completing the deal before the end of the year.
The partners
Set up as a small trading operation in Shenzhen in 1998, Golden Wing Mau (GWM) has grown rapidly to become a leading Chinese fruit distributor with operations in production, packing, storage, import/export, wholesale and retail. The group reported an annual sales turnover of RMB4bn (US$620m) last year.
An early mover to develop its retail distribution network in China, GWM has a strong set of wholesale market-based operations, and it supplies emerging retail channels such as e-commerce and specialist fruit shops.
On the import procurement side, GWM has built its international sourcing relationships, aided by South African group Capespan’s acquisition of a 25 per cent stake in the company in 2010. GWM has also become a leading distributor for Zespri kiwifruit in China.
Meanwhile, Joyvio, which was set up as the agribusiness arm of Chinese investment giant Legend Holdings in 2012, is a relatively new entrant to the fresh fruit business. The company has quickly established a leading position, making acquisitions domestically to become China’s largest kiwifruit grower and end-to-end blueberry enterprise. Joyvio has also led China’s outbound investment in the fresh produce sector, purchasing five farms in Chile in 2013, which together cover 1,500ha, as well as forging strategic alliances with Subsole and Hortifrut, two of Chile’s leading fruit enterprises.
The rationale
Explaining the rationale for the merger, Liu said: “Joyvio has prominent advantages in growing, R&D and branding; while GWM’s core strengths lie in our scale, supply chain and sales channels. Through this strategic merger, we hope to combine our respective strengths, and gain competitive advantages from farm to fork so as to achieve a great leap forward and accelerate the fulfilment of our common vision.”
Under the terms of the ‘merger of equals’, GWM and Joyvio will pool all of their respective companies and business units into one company, with shareholdings split 50:50 between the two groups. Joyvio’s wine and tea businesses are not included in the merger and will continue to operate as independent companies.
Chen Shaopeng, senior vice-president of Legend Holdings and president of Joyvio, and Liu Mau Wah, president of GWM, will become co-chairmen of the new company. The core management team of the new company will be selected from GWM and Joyvio’s current teams and assessed by the board. Zhang Jian (Jason Zhang), currently general manager of Golden Wing Mau, will become CEO of the new company.
Fast-tracking investment
Liu said the new company will be making sizeable investments across a range of areas – including infrastructure, retail channels, research and development and food safety –in order to improve its offering to customers and upgrade industry standards.
“From GWM’s perspective, the merger enables us to fast-track our investment plans,” he told Asiafruit. “For instance, we have a programme to build six high-tech distribution centres in key locations throughout China so we can provide a more professional service for all our partners, particularly our retail customers. We can now complete the process inside three years.”
Upgrading China’s domestic fruit production standards are also a core focus for the new group. While Joyvio has sizeable kiwifruit and blueberry plantings in China as well as IP varieties, GWM also has investments in production –including a blueberry orchard in Shandong Province.
“We can now put all our production and R&D together,” said Liu. “Joyvio’s R&D engineering technology centre in Chengdu will form a basis for this. We will use it to train growers in best practices and we have more international cooperation from our global partners to improve the growing, processing and storage techniques in China’s fruit industry.”
International alliances
GWM and Joyvio will continue to maintain their existing sourcing partnerships and their international relationships in exporting countries, but he added that they would now be able to offer these suppliers a stronger sales network in China via their combined wholesale operations and sales channels and relationships
Despite the contrasting backgrounds of the two companies, Liu is confident they will blend well, pointing out they share the same culture, values and vision.
“We have been talking to Joyvio ever since they entered the business and we have maintained a very good relationship, marketing some of their kiwifruit and blueberries for retail customers,” he said. “We understand each other and we want to go in the same direction.
“Holding fast to the concept 'Create Value, Share Value', the new company is committed to working closely with our partners around the world to forge a fruit value chain that has the best variety, the best production base, the most reputable brand and the highest efficiency and that supplies the best fruit and the best customer experience.”
Nevertheless, Liu admits that there are big challenges ahead, not least in integrating the operations of the two groups. “Altogether, there are around 50 companies inside the group and when you combine our 3,000 employees with Joyvio’s, we have around 5,000 people,” he said. “We have to work very hard to put all the companies together, but I am very confident about the future. We now have the best team, management and resources to address the challenges and capitalise on the opportunities in China’s fruit industry.”
