Tokyo, 25 Aug - Sumitomo Corp is to buy a substantial stake in a Chinese flour milling company in a bid to tap into the fast-growing market for Western-style bread and pasties in China, according to sources in Japan.
The Japanese trading house is reported to be lining up to buy almost a quarter of Qingdao Xinghua Cereal Oil & Foodstuff Co’s shares. The Chinese company produces 120,000 tonnes of wheat flour annually – approximately 2% of Japan’s national output.
Sumitomo is to buy half the shares of Prima Ltd, of Singapore, which currently owns 47% of Qingdao, leaving it with a 23% stake. It is believed the share s will cost Y1 billion (EUR 6.1 million).
Sumitomo and Prima made a deal in 2006 to work together in Asia and the flour milling joint venture is their first foray into China. The companies hope to use this purchase as a platform from which to expand into the lucrative Chinese market with further flour mill acquisitions and downstream ventures such as flour processing and frozen food outfits.
China is the world’s leading consumer and producer of wheat.