Real estate boss puts his money into pig farms
By Lydia Chen |
December 31, 2010, Friday
|
Print Edition
Print Edition
PIGS can be more profitable than buildings - at least that's what one Chinese real estate tycoon is hoping.
The Chongqing businessman invested 2.28 billion yuan (US$344.44 million) in pig farming in 2007 and is now ready to reap his first harvest.
Sun Shenlin, who was the mainland's 94th wealthiest person on the 2004 Forbes China Rich List, expects his first batch of pigs to bring in 15 million yuan next year, Time Weekly said yesterday.
That figure could go even higher given the current stubbornly high inflation that is being driven by the rising cost of food.
China is the world's largest breeder and consumer of pigs. Each person in the country eats nearly 40 kilograms of pork on average every year, according to the China Meat Association.
The 60-year-old property boss of China South Group decided to change career three years ago by choosing to invest almost all his money in pig breeding. He felt that the profits in the property market were not sustainable, the Guangdong-based newspaper said.
"It's a strategic decision I'd considered for a long time," said Sun, who is also one of the top political advisers in the southwestern city. "My family was against the idea, and there was a lot of mockery and laughs."
But he said he had his reasons.
There won't be any more land available to build houses when urbanization reaches a certain level, which is bound to bite into developers' profits, he said. But for pig raisers, as long as pork, a main staple in the Chinese diet, is still served at the table, profits will run for ever, Sun said.
He had 1,226 breeding pigs flown in from the United States in 2007 and built 11 pig farms. Another 29 are still under construction.
In addition, the construction of a feed factory, a slaughter house and a pork processing factory will realize his ambition of build his own pig production chain to lock in profits regardless of any price variations in the market.
"Pig breeding is the weakest point that has the potential to lose money," Sun said. "However, the losses can be offset if I can control the whole chain with profits from other parts, like feed production and pork processing."
His profits from pig raising are expected to jump to nearly 200 million yuan in 2012, according to the report.
Executives at Goldman Sachs, the world's leading investment banking and securities firm, and William Ding, CEO of China's website portal NetEase, have had similar thoughts as both have invested heavily in pig breeding in recent years.
Goldman Sachs spent up to US$3 billion to buy a dozen pig farms on the mainland in 2008 while Ding is said to feel as comfortable on the farm with his pigs as he does in the boardroom.
In 2007 the wholesale price of pork was 13.69 yuan a kilogram. Yesterday's price was almost 19 yuan.
The Chongqing businessman invested 2.28 billion yuan (US$344.44 million) in pig farming in 2007 and is now ready to reap his first harvest.
Sun Shenlin, who was the mainland's 94th wealthiest person on the 2004 Forbes China Rich List, expects his first batch of pigs to bring in 15 million yuan next year, Time Weekly said yesterday.
That figure could go even higher given the current stubbornly high inflation that is being driven by the rising cost of food.
China is the world's largest breeder and consumer of pigs. Each person in the country eats nearly 40 kilograms of pork on average every year, according to the China Meat Association.
The 60-year-old property boss of China South Group decided to change career three years ago by choosing to invest almost all his money in pig breeding. He felt that the profits in the property market were not sustainable, the Guangdong-based newspaper said.
"It's a strategic decision I'd considered for a long time," said Sun, who is also one of the top political advisers in the southwestern city. "My family was against the idea, and there was a lot of mockery and laughs."
But he said he had his reasons.
There won't be any more land available to build houses when urbanization reaches a certain level, which is bound to bite into developers' profits, he said. But for pig raisers, as long as pork, a main staple in the Chinese diet, is still served at the table, profits will run for ever, Sun said.
He had 1,226 breeding pigs flown in from the United States in 2007 and built 11 pig farms. Another 29 are still under construction.
In addition, the construction of a feed factory, a slaughter house and a pork processing factory will realize his ambition of build his own pig production chain to lock in profits regardless of any price variations in the market.
"Pig breeding is the weakest point that has the potential to lose money," Sun said. "However, the losses can be offset if I can control the whole chain with profits from other parts, like feed production and pork processing."
His profits from pig raising are expected to jump to nearly 200 million yuan in 2012, according to the report.
Executives at Goldman Sachs, the world's leading investment banking and securities firm, and William Ding, CEO of China's website portal NetEase, have had similar thoughts as both have invested heavily in pig breeding in recent years.
Goldman Sachs spent up to US$3 billion to buy a dozen pig farms on the mainland in 2008 while Ding is said to feel as comfortable on the farm with his pigs as he does in the boardroom.
In 2007 the wholesale price of pork was 13.69 yuan a kilogram. Yesterday's price was almost 19 yuan.
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