Heinz, the world's leading baby food manufacturer, has acquired three state-owned companies in Guangzhou in what it sees as an important step to increasing its mainland presence.
The three are Guangzhou Meiweiyuan Foodstuffs Co, Guangzhou Meiweiyuan Foodstuffs Factory and Panyu Jinmai Foodstuffs Factory, all of which were previously owned by the Guangzhou government's Panyu Food and Grain Bureau.
John Crawshaw, area president of Heinz Asia, declined to disclose how much was spent on the acquisitions. Meiweiyuan is one of southern China's leading sauce and condiments makers.
The deal is Heinz's third acquisition in China. Its first was in Guangzhou in 1984 when it established a joint venture to produce infant cereal.
In June 1999, Heinz set up a second venture in Qingdao to develop the market for jars of baby food.
According to Mr Crawshaw, the third acquisition has given Heinz a foothold 'into the new business of sauces and condiments' in China.
He said: 'Through our market research, we found the [sauces] industry a promising but also a highly competitive one.
'By forming the joint venture with Meiweiyuan, we can have a greater China presence.'
Heinz Greater China hopes the tie-up will enable it to double the sales it achieved last year, which amounted to US$50 million. Annual sales for Meiweiyuan are about US$20 million, according to the company.
Mr Crawshaw denied speculation Heinz had acquired Meiweiyuan simply to gain greater exposure in China, and would likely phase the brand out after the acquisition.
A number of cases have been reported where multinationals have acquired local brands, only to see them fizzle through a lack of continued advertising and brand awareness, while analysts warn that some large firms use joint ventures as a way of killing local competition.
Mr Crawshaw said: 'We will continue to use the Meiweiyuan brand for our products,' adding that the brand would be aggressively advertised.