June 25, 2019 / 12:52 PM / a year ago

Marubeni expands into cold chain service in China, eyeing growing demand

BEIJING, June 25 (Reuters) - Japanese trading company Marubeni said on Tuesday it had set up a joint venture with Chinese logistics startup G7 to lease refrigerated trailers to Chinese customers seeking to meet fast-growing demand for fresh food.

The new business, with registration capital of 170 million yuan ($24.71 million), is aiming to lease 5,000 trailers in three to five years, Thomas Wong, president of international business at G7 told reporters at a briefing.

"The space for growth in demand and development [of cold chain logistics] is huge," Jun Hirasawa, chairman and chief executive of Marubeni (China) Co. Ltd, told the briefing.

Marubeni already owns a unit in the United States called PLM that operates cold chain trailers.

Use of cold chain transport in China is between 20% and 40%, said Hirasawa, compared to as high as 98% in the United States, Japan and Europe.

But demand is rising fast, as consumers become increasingly willing to pay for safe, fresh food.

G7 currently offers technology-based services such as safety sensors and centralised expense systems to more than 60,000 clients in China including dairy firm Mengniu, meat processor Henan Shuanghui Investment and Development Co Ltd and ecommerce firm JD.com.

China's fledgling cold-chain logistics market, worth about 250 billion yuan last year, is expected to reach 470 billion yuan by 2020, according to an article published on the website of the China Federation of Logistics and Purchasing last year.

Beijing is also promoting more transportation of chilled and frozen meat rather than live animals, partly to reduce the risks of spreading animal disease, as the country battles a highly infectious African swine fever disease.

Marubeni's expansion in cold chain service in China comes as a festering Sino-U.S. trade war continues to hurt the company's agriculture trading business.

The trading house's U.S. grain unit, Gavilon, halted financial trading in agriculture last year, following losses from low U.S. soy prices due to a decline in shipments to China.

Beijing imposed 25 percent import duties on imports of U.S. soy in July last year in retaliation for moves by Washington in the trade row. ($1 = 6.8798 Chinese yuan renminbi) (Reporting by Hallie Gu, Yilei Sun and Dominique Patton; editing by David Evans)

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