by Jeff Hankins
Posted 10/11/2010 12:00 am
Updated 1 year ago
(Slideshow: Click for a photo tour of business in China, including shots inside Tyson Foods' Shanghai office. And for more coverage including stories, photo slide shows and video go to ArkansasBusiness.com/China.)
Tyson Foods Inc. of Springdale was among the first U.S. companies to enter the China market and expects to employ, directly or through joint ventures, more than 12,000 people there by the end of 2011.
Bill Teeter, senior vice president of Tyson and general manager of the Asia Pacific Region, arrived in Shanghai in April as part of a corporate restructuring. His experience with food giants Tyson, IBP and Kraft Foods in Latin American emerging markets made him well suited for continued expansion efforts in China.
Protein consumption is growing fastest in China and India, Teeter says, and Tyson is rapidly expanding to meet the demand while doing some things differently.
"Forty percent of the [chicken] farms will be owned by Tyson to guarantee quality," he says, noting that the company typically uses contractors exclusively.
Teeter says the cost of growing chickens is higher in China because corn is $8 a bushel compared with $5 in the United States.
Years ago, Tyson looked to export parts such as chicken feet that Americans didn’t want yet are considered a delicacy in China. Today, Tyson is growing and processing chickens in China and is a strategic supplier to KFC and other restaurant chains.
"KFC generates more profit in China than in the rest of the world combined," Teeter says. In fact, KFC parent company Yum Brands Inc. reports that it has 3,000 restaurants in China — that dwarfs the roughly 900 McDonald’s locations — and third-quarter profit grew 7 percent only because overseas sales surged while U.S. sales struggled.
At the 2008 shareholders meeting, Tyson announced its partnership with Jiangsu Jinghai Poultry Industry Group Co. of China. It's now owned by Tyson China Holding Ltd. and will process a million chickens a week when a processing plant with 3,000 employees opens next year.
Other Tyson investments that include a range of chicken and duck processing include Shandong Tyson Dalong Foods Co., established in 2001, and Shandong Tyson Xinchang Co., established in August 2009.