Hunan Chu Gui Xiang Agriculture Co has been selling a high-fat local-breed pork for twice the price of conventional processed pork in supermarkets across central China, according to a company co-founder. “We have been selling out all our stocks,” said Ceng Qing Hua, who has been held up as a prototype for the new breed of savvy, professional Chinese pork executives cashing in on wealthier consumers’ desire for local-breed pork, produced in small-scale operations.
Indeed, Hunan Chu Gui Xiang – which claims to be run on organic principles but isn’t certified organic – has been getting much praise in China’s official press as a model for well-financed and marketing-savvy companies, tapping a demand for organic-themed pork from local breeds. Hunan Chu Gui Xiang breeds and processes the native Ningxiang breed, a piebald or spotted pig known for its fatty meat. Packaged cuts of pork are distributed in high-end supermarkets by the firm, which was set up in a rural county under the administration of Changsha, the sprawling city that is also the capital of Hunan province, which is known nationally for its cuisine of rich, fatty pork dishes.
The potential profitability of China’s high-end pork market is typified by Ceng, a graduate student from Hunan Agricultural University (where he specialised in animal husbandry), who quit a civil service job in 2007 to establish a breeding company, Da Long Animal Husbandry Science Co.
Pork 'bottlenecks'
Six years later Ceng was joined by the marketing brains behind the operation, Jin Long, a graduate of the prestigious Fudan University in Shanghai, who came to the operation after a decade as a purchasing executive at a major Chinese supermarket chain. During a 2013 visit to Ningxiang County in Changsha, he and Ceng agreed to join forces to create a market for the Ningxiang spotted pig. The resulting firm, Hunan Chu Gui Xiang Agriculture Co was formed by Ceng and Jin, along with a third investor, financier Chen Xiao Ping, who brought 20 years of experience in funds and stocks in Shanghai.
The firm has had “huge support” from the local Animal Husbandry and Veterinary Bureau, a government office which has assisted with securing sites and permits for the company’s operations, while also advising on breeding, according to Ceng.
“It is really important for them that graduates have come to the Ningxiang pig industry,” noted Ceng, who said local farmers and officials had long lamented the “bottlenecks” in getting Ningxiang pork to market – bottlenecks such as marketing and distribution expertise. Ningxiang breeding is not competitive, but has key competitive advantages such as “great taste” and a better breeding line than other native breeds in the south of the country – many of these have been crossed with mainstream breeds like Landrace, says Ceng.
The firm, which boasts 30 university graduates on its payroll, is targeting its meat at high-end supermarkets in inland Chinese provinces. The company decided not to open its own stores – a favourite distribution and marketing approach of many Chinese meat companies – “because we thought it was too expensive”, according to Ceng. Instead, it chose to distribute through what he described as a growing wave of high-end supermarkets, selling imported and organic product to health-conscious, wealthy Chinese consumers. Such stores had previously been limited to China’s largest cities, but are now operating in second- and third-tier cities, explained Ceng.