Samsung to enter joint food venture in ShanghaiSamsung Welstory, a meal service provider under Samsung Group, announced Thursday it will establish a joint venture in July with Japan’s largest food wholesaler, Kokubu, and a Chinese agricultural product supplier.
Welstory, wholly owned by Samsung C&T, will take a 70 percent stake in the venture to be named Shanghai Welstory. Kokubu will take 17.5 percent, and the state-run Shanghai Yinlong Agricultural Development will take 12.5 percent.
Shanghai Welstory will be capitalized at around 5 billion won ($4.3 million). The joint venture will provide lunch and dinner at cafeterias in offices and factories run by private and public companies primarily in Shanghai.
Some Samsung affiliates and Japanese companies operating in the city are also set to become initial clients. Samsung said the venture aims to gradually expand its areas of service.
“Our expertise in foodstuff retail and quality management, combined with Kokubu’s logistics infrastructure and Yinlong’s supply of quality farm products, is a recipe for success,” Welstory CEO Kim Bong-yung said at the contract signing ceremony in Shanghai on Tuesday. “We hope the joint venture will grow into a company loved by the Chinese, one based on the great business competence of the three companies involved.”
China’s foodstuff retail market registered 300 trillion won last year and is set to post an annualized 9.2 percent growth by 2020 despite its slowing economy. An increasing number of global players have been scrambling to enter the market to grab their pieces of the growing pie.
Welstory, established in 1982, posted 1.73 trillion won in revenue last year to rank top among all meal services in Korea and has set itself the goal of making 800 billion won from overseas markets by 2020. The company launched a corporate cafeteria business in China in 2012, which currently provides 120,000 meals per day across 44 outlets. The Samsung unit also operates in Vietnam, supplying 180,000 meals per day to 28 outlets.
Kokubu, which saw 16 trillion won in revenue last year, is a leader of food wholesaling in Japan, with over 300 years in the industry. It has also been distributing frozen and low-temperature food products since 2010.
Yinlong is one of the top 10 vegetable brands in China.
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