Vitasoy seeks listing for Chinese expansion

VITASOY International Holdings, the local soya bean drinks manufacturer intends to generate more profits by quenching China's thirst.

The company is considering floating its shares to fund its expansion inthe mainland. Managing director Winston Lo has not ruled out listing the company this year.

The company plans to start its mainland sales and production in Guangdong within two to three years, expanding into Beijing and Shanghai later.

''China expansion will be our major thrust in the next few years,'' Mr Lo said.

Vitasoy has set up a joint venture with the Guangdong provincial government company, Kwong Ming Dairy Farm, to develop beverages under Vita's name in Shenzhen. Production begins in two months.

Vitasoy owns 70 per cent of the beverage plant, the rest belonging to Kwong Ming Dairy Farm.

Total investment in the plant is between $120 and $160 million, according to Mr Lo.

About 30 to 40 per cent of production will be for mainland consumption, while the rest will be sold in Hong Kong to provide foreign exchange for major ingredients.

The company will try to develop its own delivery network in Guangdong province but is likely to appoint agents for other provinces.

Mr Lo stressed its China production would account for a small portion of Vitasoy's total output in the future.

The 20,000 sq ft production plant in Aberdeen will be redeveloped into industrial and commercial premises. Production stops in two months.

Mr Lo said part of the new building would remain as the company's depot. The rest would be rented.

Vitasoy's current turnover is more than $1 billion a year, with annual production of 120 million litres or 18 million packages. The Aberdeen plant accounts for 20 per cent of this.

The company had experienced 10 to 15 per cent growth in sales in the past three years, said Mr Lo. Soya bean and milk drinks accounted for nearly half of Vitasoy's current production, the rest being tea, fruit juice and distilled water.

Of the sales, 80 per cent are for local consumption, while the rest is exported to more than 20 countries.

Vitasoy started a joint venture with Kwong Ming Dairy Farm in 1979, which supplies 50 to 55 per cent of Hong Kong's fresh milk.

The joint venture required Vitasoy to lend money and provide management and expertise to Kwong Ming, which sold milk to the company as repayment. This venture will be renewed next year.

Mr Lo admitted Vitasoy faced keen competition in the local beverage market but said it would maintain competitiveness by constantly studying new products and consumer trends.

It is estimated Vitasoy accounts for 80 to 90 per cent of the local milk drinks market.

Vitasoy was established in 1940 by Lo Kwee-seong, Winston's father, whose idea was to produce a nutritious, high-protein soya bean milk drink at a price people could afford.