At10:30onNovember5th,theappointedtime,correspondentsarriveatXikou,Fenghua,whereTodayFoodCo.,Ltd.islocated.Onthethirdfloor,asmallmeetingroomwhichcanaccommodateadozenpeopleisbeingclosed.AccompaniedbyMr.Yuanjian,theassistantofthegeneralmanager,wequietlypassthemeetingroomandentertheofficeofMr.Chenyifang,thegeneralmanagerofTodayFood.Afterawholehour,Mr.Chenyifangcomesintotheoffice.“Sorryforwaiting,wehavetheregularmeetingofdelicacymanagementeveryday”,Mr.Chensays.
WhatkindofdelicacymanagementmeetingcanberefinedtobehostedverydayLookingatcorrespondents’surprisedlook,Mr.Chenyifangopensthediscussion.Andourinterviewstartsfromhere.
Countingthecosts,eachoneisincreasing.
ChineseYuanexchangerate,depositandloanrate,theexporttaxrebaterateandoilprice,materialprice,laborcost,exportcommoditypricearevividlycalled“threeratesandfourprices”.Nowitseemsthateachoneofthesebecomestheburdenforthecompany.
TodayFoodCo.,Ltd.islocatedinscenicXikou,foundin1992.NowithasbecomethelargesttunaprocessingenterpriseinChina,withtheannualproductioncapacityof30,000tons.
Mr.Chenyifangtellsreporters:overtheyears,Todayhasbeenfocusingonownbusiness,withoutdiversifyingtheinvestments.Basedontheaccumulationovertheyears,thecompany’sfinancialstatusisstillquitegood.Buthefeelsveryconfusedbythesituationthattheproductioncapacityisexpanding,buttheprofitisnotgrowingaccordingly.
“Labor,water,electricity,gas,packing,materials,logisticsandetc,noonedoesn’tincrease”,Mr.Chenexplainsonebyonetoreporters.Increasingcostseatthebigpartofcompany’sprofits.
Thesedisturbingfactors,summarizedas“threeratesandfourprices”,arereferringtoChineseYuanexchangerate,depositandloanrate,theexporttaxrebaterateandoilprice,materialprice,laborcost,exportcommodityprice.Itseemsthateachofthesefactorsbecomestheropetoholdbackthecompany.
“Theseexternalfactorsarenotunderourcontrol.Wecan’texpectpenniesfromheaven.Wecanonlydealwiththesefactorsbytappingthepotentialandcontrollingtheinternalcosts.”Mr.Chenyifangintroduces:whatisthecostofoureachproductWhichpartofcostsisoutofcontrolWhichpartofcostsisundercontrolWhereareroot-causesofoutofcontrolWeneedtoknowalltheseeveryday.Andthesearethecontentofthedelicacymanagementmeeting.
Fishprocessingenterprisesarelabor-intensiveenterprises.TodayFoodemploysaround1,200people.“Nowthecompany’slaborcostincreases15%to20%everyyearandyoungpeopledon’twanttoworkatfishprocessingindustry.Thecompany’semployeesaremostlyaround35-50yearsold.He(she)hasrelativelylowleveleducation.Andalsothecostoftrainingisincreasing.”Mr.Chensays.
TheappreciationofChineseYuanisanothertoughrope.“TakeexportsalesofUSDollar40millionasanexample,1%appreciationofChineseYuanmeansthelossofUSDollar400,000.”saysMr.Chen.Formanysmallandmediumsizedenterprises,thisnormallymeansoneyear’sprofits.
“Threeratesandfourprices”troublemanyenterprises.ButforTodayFood,thebiggestheadacheisnottheincreasingcostsbuttheshortageofrawfishes.
Relyonthebigtree,solvingtheissueofrawfishresource
Attheearlystageofcompanydevelopment,TodayFoodcouldonlydoprocessingbyusinglimitedtunaresources.It’shardforcompanytogrow.HowcanwebreakthroughtheceilingofgrowthAfterhavingthepainfulexperienceofAsianFinancialCrisis,TodayFoodstartedtoseekchangeat2010.Usingthe“additionandsubtractionmethod”,TodayFoodfinallyfoundthewaytodevelop.Oneofthelargest“additions”istheintroductionofstrategicinvestor–ZhejiangOceanFamilyCo.,Ltd..OceanFamilyisthesubsidiaryofWanxiangGroup.
Inearly2010,OceanFamilytooktheinitiativetoapproachTodayFood,discussingthecapitalrestructuring.Thenegotiationwentwell.InMay2010,TodayFoodofficiallyintroducedthestrategicinvestor.
“Thisiscalledgiveup.Nogiveup,nogain.”Mr.Chenyifanghasthestrongfeelingofwhat‘relyingonthebigtree’isabout:afterOceanFamilycontrolsTodayFood,mypersonalrightsbecomesmaller.Butthemanagementisgettingmoreprofessional.Andwedon’tneedtoworryaboutresourcesoftunas.Inordertoprotecttheoceanfisheryresource,theinternationalfishingmanagementorganizationsmaketheclearrules:companiescanonlyfishunlesstheygetthequotationoffishing.Chinahasjustmorethan20tunapurse-seinevessels,withtheannualfishingcapacityof150,000tons.AndOceanFamilycanonlyreachtheannualfishingvolumeof20,000tons.ThecooperationbetweenOceanFamilyandotherbigChinesefisheryfirmsfurtherguaranteestherawfishsupplytoTodayFood.
“Theintroductionofthestrategicinvestor,nowitseems,wastherightaction.”Mr.Chensays.Forfoodprocessingenterprises,thebiggestissueisresource.ThisstrategicadjustmentandcapitalrestructuringletsTodayFoodbreakthroughtheceilingofgrowth.AndOceanFamilybuildsupamoresolidindustrychain,achievingawin-winresult.
Focusingcompetitiveness,developingcoreproducts
Mr.Chenyifangsays:havingmanyproductsbutnocoreproduct,anenterprisecan’thavesufficientinfluencingpowerandownrealcompetitiveness.Beforetherestructuring,TodayFoodhadmorethan30differentproducts,suchascrabmeat,shelledshrimp,frozenfishandetc.However,marketneedschangedquicklyandthecompanycouldn’taccordinglymatchthedemands.Moreover,withouthavingtheadvantageofresource,thecompanycouldn’thavetheinfluencingpower.
“Aclenchedfistisstrongerthanfiveseparatefingers”,Mr.Chenyifangseriouslyannouncedduringacompanymeeting.RestructuredTodayFoodwilluse“subtractionmethod”:kickoutproductswithoutcompetitivenessandputalleffortstodevelopafewproductswithhighadded-values.“Nowwearefocusingon‘twofishes’and‘oneflower’”,Mr.Chenyifangsmilesandtellsreporters“‘twofishes’refertotunaandmackerel,and‘oneflower’referstobroccoli.”TodayFoodhasplantedmorethan4,000acresofbroccoliinNinghaiandZhenhai.Throughmethodsofdryingandfreezing,thecompanycanmakefreshbroccoliintofoodswhichcanbeeasilycarriedandpreserved.Thisproductisexporting100%toothercountries.
Mr.Chenyifangtellsreportersthattherecoveryisessentialfortunaprocessing.Iftherecoverycanbeup1%,wecancreateconsiderableprofits.Inthemeantime,tunaproductionalsogeneratesmanyscraps.Althoughenterprisesaretryingtoturnthosescrapsintowealth,duetothelimitationofcurrenttechnologies,mostofscrapsarewasted.“Scrapsarealsotheresource.Ifwecanuseitproperly,scrapscanbecomethenewsourceofprofits.”Mr.Chenyifangsays.InTodayFood,fishmealmadebyfishbones,fishflossmadebytunascrapsandetcarecommonexamplesof“turningwasteintotreasures”.Moreover,underdeepprocessing,fishgutsandfishoilcanbemadeashealthproducts,codliveroilandetc.
‘Tunashavesomebrownmeat,commonlyknownasredmeat.Weuseittomakecannedpetfood.Anditcangeneratemorethan10millionChineseYuanperyear.”Mr.Yuanjian,theassistantofthegeneralmanager,introduces.
NowTodayFoodisaimingtheotherfish—mackerel,whichoncewasclassifiedintolow-gradefish.Anditissoldparticularlycheapinthemarket.Mr.Chenyifangtellsreporters:theresourceofmackerelisveryrichinYellowSea,EastChinaSeaandothershortseas.Withthedevelopingoffishingtechnologiesandprocessingprocedures,thetasteofprocessedmackerelismuchbetternow.TodayFoodcanprocess5,000to10,000tonsofmackerelperyear.Thecompanycanmakethemackerelfilletsorcannedmackerel.Thevalueoftheseorderscanbe20to30millionChineseYuanperyear.AndTodayFoodhasbeenoneoffewenterpriseswhichcanexportcannedaquaticproductstoEU.
Freshfishesaremorevaluable.Mr.Chenyifanghasagrandplan:workwithseparatefishermenorfishingunions.Mackerelswillbefrozenimmediatelyandthenprocessedashoretomaintainthefreshnessoffishes.Ontheonehand,doing“subtraction”:excludeunprofitableproducts,givinguplow-endmarket;ontheotherhand,doing“addition”:focusonhigh-endmarket.Gettingmoreoutof“twofishes”,preciselyanddeeply,itisthewaytogetridofthewastefulmodeofoperationandcreateprofitsthroughdelicacymanagement.
“Nextyear,wewillinvest20millionChineseYuantointroduceasetofadvancedequipmentfromDenmark.Theequipmentwillbeusedtoprocessthescrapsoftunas.”saysMr.Chenyifang.Scrapsprocessedbythisequipment,dependingondifferentmaterials,canbetherawmaterialsforcosmeticandhealthproducts.Andthiswillbecomeanewsourceofprofitgrowthforthecompany.
Exploitthedomesticmarket:tunas“swim”ontocitizens’dinning-tables
Alongwiththeincreasingofthelivingstandard,peopleareshowingthehigherconsumptionneedssuchaseating,drinkingandetc.Thedemandforseafoodismoreobvious.OceanFamilytimelystartsthedomesticmarketstrategy.Thisactionnotonlyseizesthemarketopportunity,butalsoleadstheconsumptiontrend.
RecentlyOceanFamilylaunchesmorethanadozensellingstoresinBeijing,Shanghaiandothercities,marketingthefreshesttunaproducts.Throughthoseoutlets,tunaproductsprocessedbyTodayFoodarealsotargetingnationwidemarketandreachingcommoncitizens’dinning-tables.
“Formerlyweexportedourproducts100%.Butnow,wehaveestablishedoursellingoutletsineightcitiessuchasBeijingShanghaiandetc.ThesellingstoreorseafoodcounterwillalsobesetupinNingboquickly,sellingtunasatthepricewhichwillbeslightlyabovethewholesaleprice.”,Mr.Chenyifangtellsreporters.Inmarketing,TodayFoodisdoing“addition”:focusonthedomesticmarket,sopeoplecanoftenenjoyfreshtunas.
Lastmonth,OceanFamilyopeneditsonlineflagshipstoresonTmao.comandwomai.com.Therefore,TodayFood’sproductsarealsoonboardofe-commerce,thebroadermarket.
DevelopingthenewabroadmarketsisalsoTodayFood’soption.Mr.Chenyifangtellsjournalists:sincelastyear,TodayFoodhasbeenactivelyexploitingnewemergingmarketssuchasEastEurope,Middle-East,Africa,SouthAfricaandetc.insomeareasmentionedabove,thefirmhasformedastablecustomerbase.
InTodayFood’sworkshop,journalistswitnessthesituationthatworkerareoperatinginabusybutorderlymanner.Intheotherworkshop,workersareinstallingthenewequipmentimportedfromThailand.ThisisTodayFood’snewloinworkshopwiththeinvestmentof20millionChineseYuan.Whentheworkshopisupandrunningatnextmonth,theannualtunaprocessingcapacitywillincrease20,000tons.AndTodayFood’sannualcapacitywillreach50,000tonsfromformer30,000tons.ThisbiggestChinesetunaprocessingenterprise,throughstrategicrestructuring,haspreparedreadytherationforthe“wintertime”andshownthestrongconfidenceforthefuture.
Relativelinkages:
Tuna:thekingoffish
Tunahasthereputationas“kingoffish”(itsmeatisfresh,deliciousandlesssusceptibletoenvironmentalpollutions)andisararehealthyfood.Tunahasupto20%proteincontentandverylowfatcontent,withthenicknameof“chickenfromthesea”.Therearemorethan30differentspeciesoftunas.Sixoutofthosespecieshavehigheconomicvalue,includingBluefintuna,Bigeyetuna,Yellowfintuna,Sword(Flag)fish,Albacore,andSkipjack.Thefirstfourspeciesaremainlyusedfortheproductionofsashimiandthelattertwoareusedforcanningproduction.