Nestle expands to meet demand
FOOD manufacturer Nestle plans to establish a new plant in China every year to satisfy the fast expanding local market, says a senior executive.
Nestle runs two plants in China, one in northeastern Heilongjiang province, producing infant formulas, and the other in Guangdong and specialising in instant coffee and whitener.
Marc Dreyer, general manager of Nestle Dongguan, said China had been identified as a key market by the Swiss food maker.
The Dongguan plant, a joint venture with a total investment of 120 million yuan (about HK$160.8 million at the official rate) started operating in 1991, and is now running at capacity.
Nestle holds a 60 per cent stake in the joint venture, while the remainder is held by its Chinese partner, Dongguan Sugar and Liquor Co.
The annual production capacity is 2,000 tonnes of coffee and 2,000 tonnes of whitener. Company officials said the majority of the products were sold in the domestic market.
Nestle Dongguan plans to expand production capacity to produce 7,000 tonnes of instant coffee and 7,000 tons of whitener a year.
Expansion should commence next year, and is expected to be completed by 1997. Additional investment of 130 million yuan will be needed.
''We are expanding the capacity because we know the market is getting bigger. We will meet the growing demand for instant coffee in China,'' said Mr Dreyer.
He said the new plants to be set up in China would be for several product lines.
''Nestle is the world's largest food manufacturer and we have a full range of products to meet demand of Chinese consumers,'' he said.
He said when Nestle started in China, a large quantity of raw materials had to be imported to maintain product quality. But the proportion of imported material had decreased rapidly.
Mr Dreyer said a key task for the Dongguan plant was to find substitutes for imported raw materials.
A coffee production base which will have an annual output of 50,000 tonnes of coffee beans is being set up. A similar project in Hainan province is also under way.