Food companies flocking to Foodpolis


BGX Group chairman Bi Guoxiang	CEO of Hampton Grains John Kwak

By Lee Hyo-sik

The Korea National Food Cluster, named Foodpolis, has been attracting keen attention from food companies both at home and abroad who are looking to set up a strategic base for China, Japan and other Asian markets.

So far, 107 companies and research centers, including 51 from overseas, have expressed interest in establishing a presence in the state-administered food cluster in Korea's southwestern region. When completed by 2016, the government expects at least 150 companies and 10 research centers will operate in Foodpolis, churning out $14 billion in output annually and generating 22,000 new jobs.

On March 20, the Ministry of Agriculture, Food and Rural Affairs signed a memorandum of understanding (MOU) with BGX Group from China, a distributor of refrigerated and frozen food products. Established in 2007, BGX earned nearly $10 billion in sales last year from running eight wholesale markets and 50,000 large-scale distribution centers in Nanjing and Harbin.

Under the agreement, BGX will establish food processing facilities and logistics centers inside Foodpolis in Iksan, North Jeolla Province.

BGX Group Chairman Bi Guoxiang said the company will manufacture high-quality and safe processed food items, using ingredients produced in Korea, and then ship them to China.

BGX Group chairman Bi GuoxiangCEO of Hampton Grains John Kwak

Lee Ju-myung, second from left, director general at the Ministry of Agriculture, Food and Rural Affairs, poses with Xu She Shu, third from left, CEO of Clever Mama, after signing a memorandum of understanding at the Korea National Food Cluster Promotion Hall in Iksan, North Jeolla Province, on Aug. 28, 2014. Clever Mama, a beverage maker from China, will invest 5.1 billion won ($4.5 million) to build a plant on a 33,000 square-meter site inside the cluster.
/ Courtesy of Ministry of Agriculture, Food and Rural Affairs

"Chinese consumers prefer made-in-Korea products because they are perceived as safer and more sanitary," the chairman said. "I decided to set up operation in Foodpolis in line with the Chinese government policy encouraging Chinese companies to make inroads into foreign markets. We picked Korea as our first overseas investment destination because Chinese consumers view Korean food as high-quality and safe."

He said the group chose the food cluster because it offers everything food product manufacturers need. "Foodpolis has all the necessary business and residential infrastructure for foreign companies like us. Also, the cluster is located closer to Gunsan Port and New Saemangeum Port, making it easier for us to ship our goods to China."

An agriculture ministry official said many Chinese food companies have expressed interest in Foodpolis because the Korea-China Free Trade Agreement has made it easier and less costly to produce food items in Korea and ship them back to China.

"Besides closer bilateral trade ties, companies operating in Foodpolis can use its state-of-the-art research facilities and other infrastructure, and benefit from a wide range of incentives," the official said. "A favorable image of Korean food items among Chinese consumers is another reason for mainland companies to locate at the cluster."

Besides Foodpolis' geographical proximity, advanced information technology infrastructure, skilled manpower, attractive business incentives and many other favorable attributes have drawn global food producers.

Companies are exempted from paying corporate tax for the first three years. They will then receive a 50-percent reduction for the following two years. Investors are also exempt from property taxes for 15 years.

Lee Ju-myung, center, director general at the Ministry of Agriculture, Food and Rural Affairs, poses with Samuel Park, second from right, managing director of Goldrock International, after signing a memorandum of understanding at the Korea National Food Cluster Promotion Hall in Iksan, North Jeolla Province, on Nov. 5, 2014. Goldrock International, a coffee producer in Kenya, plans to invest 5 billion won to set up a plant on a 20,000 square-meter site inside the cluster.
/ Courtesy of Ministry of Agriculture, Food and Rural Affairs

Five firms confirm investment in Foodpolis

Among 51 foreign food companies that signed MOUs with the agriculture ministry, five have finalized their detailed investment plans in Foodpolis. They are Clever Mama and Weihai Ziguang Biological from China, Goldrock International from Kenya, and Hampton Grains plus Wellspring Industry from the United States.

They have filed an investment report with the ministry to confirm their commitment to the food cluster.

In December 2014, Hampton Grains, headquartered in Anaheim, California, made official its plans to build grain processing facilities on a 21,000 square-meter-site inside Foodpolis. The company operates grain farms in the U.S., Canada and numerous South American nations, and also buys wheat, soybeans, corn and other grains from farms in these countries. Its sales reached 100 billion won in 2014.

"I am positive that Foodpolis will emerge as a food industry hub in Northeast Asia. This is why I decided to invest," said John Kwak, CEO of Hampton Grains. "We will complete the construction of grain processing plants by early 2017, which will primarily handle organically-grown produce in Korea. We will then export the products to the United States."

Goldrock International, a coffee producer in Kenya, has also unveiled a plan in November last year to invest 5 billion won to set up a coffee processing and packaging plant on a 20,000 square-meter site inside the food cluster. The company is expected to hire at least 100 employees.

Company CEO Samuel Park said he wants to process and package coffee beans brought from Kenya, and ship them to China and other Asian countries. "I decided to set up operation in Foodpolis because of its superior research facilities and attractive support programs. I believe the cluster will be very successful."

In February, Clever Mama, a beverage maker from China, also confirmed its plan to invest 5.1 billion won to build a plant on a 33,000 square-meter site, employing about 100 workers.

Among domestic food companies, CJ, Dongwon and other large food companies have pledged to set up manufacturing plants and research facilities inside Foodpolis, which will become their export base for the rapidly-growing Chinese market.