Tokyo, Aug 6 - Japanese trading firm Itochu Corp and bakery Shikishima Baking Co said they have agreed to form a joint venture with Taiwan's Wei-Chuan Foods Corp to enter the Chinese bread market, taking advantage of changing tastes in the country.
Itochu, Japan's fourth-biggest trading house, and unlisted Shikishima, Japan's No. 2 bakery which makes the Pasco brand, said in a joint statement on Wednesday that the venture will build a bread factory and begin wholesale operations by February 2010, initially targeting wealthy consumers in Shanghai.
That will be a step further than Japan's top bakery Yamazaki Baking Co, which bakes bread at its retail shops in China.
Wei-Chuan Foods is a subsidiary of Chinese food company Ting Hsin International Group, which has Tingyi, China's dominant instant noodle maker, under its umbrella.
Itochu has arranged business ties between Ting Hsin and other Japanese companies including Asahi Breweries Ltd and Kagome Co.
"We got a request from Ting Hsin International Group to find a Japanese bakery partner with hit products," said Itochu spokeswoman Yuko Takeuchi.
She said Ting Hsin, which is also strong in the bottled tea and mineral water businesses in China, considers bread as the country's next growth area given that the market has grown 30 percent a year to some 100 billion yen ($923 million).
The joint venture, Ting Sheng (Cayman Islands) Holding Corp, aims to sell 20 million loaves of bread and pastries worth 90 million yuan ($13 million) in its first year.
The venture is capitalised at $11 million, with Wei-Chuan Foods holding a 60 percent stake, Shikishima Baking 24 percent and Itochu the remaining 16 percent. ($1=6.852 Yuan) ($1=108.34 Yen)