The deal will see 60,000 tons of volume added to the overall output of that JV’s operations in China.
BioMar said, geographically, the acquisition of Haiwei is in line with its ambitions for the JV due to its location in the south of the country, near Macau, an important aquaculture region.
Gorjan Nikolik, animal protein analyst at Rabobank, told FeedNavigator: "This transaction is part of a bigger trend occurring globally within the aqua feed industry. The main feed companies in the West have been expanding out of the salmon industry. This is in order to find new growth markets as well as leverage the formulation technology developed for salmon feed. In recent years, JVs have become even more common in this sector as a strategy to enter into new markets but mitigate some of the risks which can be considerable when entering a new market in a developing country without a local partner."
Growing middle classes
The JV, said BioMar, is intending to develop high performance feeds for the Chinese market.
In fact, Tongwei bought Haiwei three years ago and set about reviving its fortunes; that acquired firm is now said to be supplying feed to high value fish species like Japanese sea bass in Southern China.
Up until recently, the trend in China was to produce fish at the lowest cost possible, with consumers unable to afford more expensive fish species. However, the market is taking a new direction, according to BioMar's Niels Alsted, vice president, Asia and business relations.
He told Schouw & Co that demand for better-quality fish has been booming in China and South-east Asia in recent years, with the growing middle classes no longer wanting to eat fish containing heavy metals or fish farmed under non-sustainable conditions.
BioMar also reported on the status of the high end fish feed plant it is constructing with its Chinese partner, saying it is on progress and scheduled to start operations in the second half of 2017.
That factory, sited in the Wuxi area, nearby Shanghai, is slated to have an initial capacity of 50,000 tons with flexibility to expand to double that amount as the demand arises.
Until the new plant comes on stream, the Danish firm is able to use part of the capacity at Tongwei’s 55 existing factories, with BioMar fish feed being produced in Chengdu in South Central China now.
Further plant expansion
BioMar, when originally announcing the JV in August 2015, said the partners intend to build a further three to five new factories of a similar or larger scale in China and to then expand production and sales in other countries in Asia.
Tongwei, which is listed on the Shanghai stock exchange and has operations in China and Southeast Asia and fish feed output in the region of 2.5m tons a year, brings factories, distribution networks, business relationships and customers to the JV.
But BioMar said it, as a supplier of specialized larval and fry diets, grower diets and functional feeds, would contribute know-how and product ranges for the fast growing production of high value fish species in China.
And last year, its CEO, Carlos Diaz said the Danish group’s formulation model would be of great value to the Chinese aqua feed partnership in the development of feed for marine and fresh water species such as sea bass, sea bream, cobia, turbot, bass, grouper, trout, sturgeon, tilapia, eel, and shrimp.
In terms of aquaculture expansion and ecological challenges, he said BioMar would also bring its expertise in environmental management and also knowledge of highly specialized diets developed for intensive fish production in recirculation aquaculture systems with very limited water consumption.