Chinese beef acquisitions in Uruguay as Beijing dangles free trade deal

Better known for making motorbikes than steaks, Sundiro Holding Co (which contains the Foresun food and livestock businesses) bought a 50% stake in Uruguayan beef processor Lorsinal SA this summer for US$16.65 million in a deal alongside venture capital firm Latin America Value Partners, which took the other 50% stake. Last year Sundiro acquired another Uruguayan chiller, Rosario, as part of the company’s stated goal of becoming China’s leading beef supplier. The company also owns two meat plants in Australia, as well as feedlots and factories in Argentina, which it purchased from Brazilian meat processing giant Marfrig. Its two acquisitions give Sundiro a 6.1% stake in Uruguay’s overall beef kill – making it the fifth-biggest player in the industry. Lorsinal slaughtered 38,448 cattle in the first quarter of 2016 and ranks as the 13th busiest beef processor in the country in this period. It also had exports of US$33.6m in the first half of the year, of which US$10.5m went to China. The company was formerly owned by businessmen Gerardo and Roberto Pérez. Uruguayan economy minister Danilo Astori announced recently that China had indicated it wants to do a free trade deal with Uruguay – a proposal that came from Chinese commerce minister Gao Hucheng. Such a deal would ultimately give the country the same status as Australia, a major supplier of meat, which is currently going through a rough patch in its relations with China. A free trade agreement is “ necessary to make Uruguay competitive… ” with other key suppliers to the Chinese market, like New Zealand which signed a free trade deal with Beijing in 2008, according to Gabriel Rozman who chairs the Uruguay-China Chamber of Commerce. Growth in Uruguay’s exports to China has already been dramatic – going from US$200m in 2009 to US$1.65bn in 2014 – and driven by the Asian giant’s demand for agricultural commodities including meat and soybeans. Known for its free market and liberal political credentials, Uruguay is a land of 3.4 million people bordering Argentina – which also sells beef to China. The only other Latin American nation with a free trade deal with China is Chile, a major supplier of minerals and agricultural products to China. However, Brazilian beef’s re-entry to the Chinese market has pressured Uruguay in 2016 particularly as a weaker real saw Brazil emerge as China’s first-place supplier for the first six months of the year with a 32% market share compared to second- and third-placed Uruguay and Australia with 24% and 19% market shares respectively. Chinese frozen beef imports totalled 467,143 tons in 2015, with Australia supplying 51% of that total while Uruguay and Argentina supplied 42% and 15% respectively. The Sundiro backstory is colourful. Having become a household name in the coal, logistics and motorbike manufacturing, Sundiro Holding Co is listed on the Shenzhen stock market and merged earlier this year with Heilongjiang Foresun Cattle Industry Co, which operates feedlots and slaughterhouses in northern China. The merger gives Foresun access to the finance it needs for further global expansion.

Chinese beef acquisitions in Uruguay as Beijing dangles free trade deal

The purchase of a Uruguayan beef processor by a giant Chinese industrial conglomerate looks well-timed as China dangles the prospect of a free trade deal before the Latin American nation.

Related Topics

Uruguayan beef exports on the rise, despite Russian recession