On June 19, Foshan Haitian Flavouring and Food Co Ltd （Haitian） officially listed on the main board of the Hong Kong Stock Exchange, becoming the latest company to go public in both Hong Kong and Mainland China this year. One of the key objectives of this Hong Kong listing is to lay the groundwork for expanding into international markets.
According to the prospectus, approximately 20% of the net proceeds from this IPO will be used to build the company's global brand image, expand sales channels, and enhance its overseas supply chain capabilities, in order to increase its global influence.
Founded in 1995, Haitian is a leading enterprise in China’s condiment industry, having listed on the Shanghai Stock Exchange in 2014 (stock code: 603288). The Company's products portfolio consists of soybean sauces, general sauces, oyster sauces, chicken essence seasonings, vinegar and others, with soybean sauces, general sauces and oyster sauces as its main products. Based on 2024 revenues, the company ranks first in the Chinese condiment market. In 2024, the size of the Chinese condiment market is expected to reach CNY 498.1 billion, with Haitian's market share at 4.8%.
Despite its leading position in the industry, Haitian still faces intense competition in the domestic condiment market. Taking soy sauce as an example, on one hand, more industry players are entering the market. For instance, Arawana and Luhua from the edible oil industry both announcing plans to intensify their condiment efforts. On the other hand, the competitive focus within soy sauce is becoming highly homogenized, with many companies in the industry recently focusing on promoting health-conscious products, which has intensified competition. According to financial data from Caizhong Media, due to increased industry competition, the price per ton of Haitian soy sauce is expected to drop by 2.5% year-on-year in 2024, to CNY 5,363.74 per ton.
In response to the domestic market's increasingly fierce competition, Haitian is accelerating its overseas expansion. In 2023, Haitian began establishing its international presence by founding Haitian International Investment Co., Ltd. and Tianqi International Innovation Co., Ltd., both responsible for expanding its international business. In 2024, the company established a wholly-owned subsidiary, Haitian International Trading Co., Ltd., and set up wholly-owned subsidiaries in Vietnam and Indonesia, where it has built local factories. In addition to Southeast Asia, Haitian has also entered the U.S. market.
However, Haitian's performance overseas has not been ideal, and the company’s official financial reports have not disclosed specific overseas market results. When responding to related questions from investors, the company simply stated that the overseas market currently accounts for a small share of revenue. According to China Condiment Association, Haitian’s export revenue accounted for just 1% of its total sales in 2022. The company’s management is fully aware of the challenges it faces in overseas markets. After the appointment of the new chairman, Cheng Xue, expanding overseas markets has become one of the company’s key strategies, with a goal of doubling overseas revenue within three years.