info@genesus.com
This past week we were in Shanghai, Hefei, and Beijing. Our observations:
- We had meetings with swine industry participants. Consensus is pork business has slowed with few new buildings under construction. Financial losses have been significant the last two years.
- We were told the number of foreigners living in Shanghai has shrunk 70% since before Covid.
- We were told what used to be full office buildings in Shanghai now under 50% occupied.
- An economist we spoke to said China is suffering from excess supply pressuring prices down. Too many apartments, too much steel, too many vehicle makers (reported to be over 100). We were told apartments have devalued almost 30% from peak.
- We saw many empty stores and some factories in our travels and numerous large but mostly apartment projects stopped in mid construction throughout our travels.
- Roads in China are good. We encountered no potholes.
- High speed trains are fast and efficient. We went from Hefei to Beijing in 3.5 hours or about 650 miles (1,100 kms). Cost of ticket about $65. Fast trains are available throughout the country.
- China’s efforts to cut back on smog seems to be working. Air is clear so much better than in past. Maybe the electric cars are working in conjunction with other measures.
- U.S. winning fast food and hotel positioning. McDonald’s. Pizza Hut, Domino’s, KFC, Burger King, Starbucks are everywhere. Even Tim Horton’s from Canada. Hotels including the Holiday Inn, Marriott, Hyatt, Hilton, Wyndham with a special mention to Premium Super 8 hotels. Not just Super 8’s but in China Premium Super 8’s.
- While in Shanghai we visited Sam’s Club part of Walmart. We of course saw the pork section. What was fascinating is the large display of China Black Pig Pork, Black Pig would compare to U.S. Berkshire breed. Black Pig Pork was selling 2 to 3 times the price of standard commodity pork. We asked why consumers buy Black Pig Pork; we were told taste. Once again seeing the premium consumers will pay for better tasting pork over standard commodity pork. Many consumers complain in China that pork has lost its taste compared to past.
- The Genesus team was at the Global Pig Genetics Summit in Hefei, China. Spencer and I spoke to conference. I spoke about Global Pig Markets and Spencer spoke on the industry’s need to produce better tasting pork. There were about 700 people in attendance. Several other genetic companies spoke mostly focusing on pig production traits none other than NSR from USA seem to realize we are producing food and we need to address the world’s number one factor in pork purchase – taste. Seems the European Genetic companies are focused on lean, lean, lean, feed conversion and attempts of addressing high mortality with attempt at fixing robustness and cannibalism issues they have. Genesus will continue with our path of a robust pig, big litters and pork taste that drives demand.
- PIC addressed Gene Editing at conference. Seems their main issue is it will lower Greenhouse gases and address sustainability (whatever that means). It appears they have no data that addresses current consumer acceptance of Gene Editing. There was no discussion on the premium price they would be demanding for a Gene Edited pig or guarantee of market acceptance to the producers who would purchase gene edited breeding stock.
- At the conference we learned 65% of all genetics imported to China the last several months have come from USA as China is looking for a robust pig that will live in the very disease challenged environment. Genesus us proud to be part of the USA supply of registered pigs from our Paramount Nucleus now the largest purebred herd in USA.
- From the conference we learned there has been much downsizing in the business related to the swine business with many finding themselves unemployed. We were amazed by the number of solid candidates we received re a swine administration position that is bilingual.
- There was open dialogue at the conference in a question-and-answer period. What will China’s sow herd be in the future? It’s currently around 40 million. Some said in the future 30 million, some 20 and one even said 15. If any of this is even close massive restructuring will continue. We are not convinced this depends on pig production gains, not sure can happen with current disease challenges and mortalities. Average mortality birth to market is now 35-40%.
Summary
China industry is biggest in the world. It’s a dynamic market making money now. The future is volatile with many economic under currents.
We are heading to Japan next. Will report observations next week.
Jim Long presenting at the GPGS in Hefei, China
Spencer Long presenting at the GPGS in Hefei, China
