Focus on Green Biotech

Chmn. Lee of CJ Group stresses new green biotechnology with $750 mln in investments overseas

CJ Group will do its best to develop its green bio technology used to extract amino acids from corn and grains, the major ingredient for additives for animal feeds such as nucleic acid, lysine, threonine and methionine, among others.
Chairman Lee Jae-hyun told an executive meeting of the group that the project will be so important that it could either make or break the group. The group’s growth in the green bio sector will be faster and become a cash cow for the group in the days ahead if it is able to develop green biotechnologies rapidly enough to enhance its competitive edge in the industry. The group will let CJ CheilJedang, a major affiliate of the group, take charge of the project under a strategy to speed up its growth by dominating the global market for green biotech, including the amino acid market, as foodstuff prices in the global market will not be subject to the government’s price controls.
The sugar refining affiliate will expand its overseas production operations to the United States and Malaysia in the near future in addition to Indonesia, China and Brazil, where the company has operations already.
The company’s plan is not a step-by-step one, but an immediate one and simultaneously in all of those target countries. The company will kick off its operations in the United States next year somewhere in the Midwest of the country where major corn farms are located. The company will also set up an amino acid plant in Malaysia next year.
The company will also expand its operation in China by expanding its plants in the inner regions of China and, at the same time, expand the production capacity of a local starch production plant in Shenyang, China, which it took over last December, by 100,000 tons per year. The company expects its total overseas sales of amino acid would be up three times the current record to 2 trillion won in 2013.
Vice President Kim Cheol-ha in charge of bio feed production, said CJ CheilJedang will bypass Ajinomoto of Japan in the green bio market to be the leading company by 2013, boosting its share of the global market to 43 percent with its operations in Indonesia and China at full capacity in the second half of next year and those in the United States and Malaysia two years later.
CJ CheilJedang overtook Ajinomoto in the production of nucleic acid in 2006 and has been strengthening its market share ever since by making investments overseas, particularly in China, to boost its share of the global nucleic acid market to 35 percent. It plans to further expand its share to 43 percent when its plant in Indonesia goes online in 2013, the company said.
The company also plans to dominate the global market for lysine, an additive in the three key animal feeds in the world, two years later. China’s CBT, Ajinomoto and CJ CheilJedang are in a three-way competition in the $2.5-billion global market for lysine, which is why the company has made investments in China and Indonesia to boost its global market share to the largest.
CJ CheilJedang and its overseas affiliates recorded 534 billion won in operating profit last year, up 12 percent from the previous year, which is not bad considering that the company’s operating profit at home went down 21 percent to 207.6 billion won last year due to a slump in its sugar refining operation. Overseas affiliates, such as those in China, posted 177.8 billion won in operating profit, up 22.4 percent from the previous year and up a whopping 300 percent from 2008.
The bio sector’s share of the group’s operating profit has been rising fast with the three subsidiaries in the sector combining to share 33 percent of the group’s total operating profit, up from 14.6 percent in 2008. It is expected to divvy up 40 percent of total operating profit for the group in 2013, the company said.
CJ CheilJedang entered the overseas markets for sugar and MSG in the 1960s and thereafter has continuously promoted processed food exports throughout the 1970s when it targeted Koreans living abroad in the United States, Japan and China. In the 1980s, products using nucleotides, lysine and antibiotics as ingredients were added to its global repertoire and, accordingly, CJ CheilJedang gradually increased the scope of its overseas business. In particular, bio and pharma were the areas CJ CheilJedang most extensively focused on for entry into overseas markets. CJ CheilJedang entered the Indonesian market in November 1989 for the purpose of expanding its bioscience business. After securing a stable market for feed, chicken farming, lysine, nucleotides and MSG, CJ CheilJedang then moved to Vietnam, Myanmar and the Philippines in the 1990s. The company plans to add pharmaceutical production and marketing businesses to its existing feed businesses in these countries. nw

Chairman Lee Jae-hyun of CJ Group.

Photo by courtesy of CJ Group