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China attracts cold storage industry

Shanghai, China: Middle-class consumers’ concerns about food safety are driving growth of the cold chain infrastructure.  International cold storage experts see China as a market where the industry can offset sluggish revenues in developed countries, building on growing middle-class demand for clean, safe and convenient food, reports China Daily.

Pfs Yida Logistics Group, a joint venture between the US-based Preferred Freezer Services and Yida Group, is venturing into China’s cold storage market.  PFS owns a 60% stake in Pfs Yida Logistics while the Dalian-based Yida Group holds the other 40%.

The venture is opening its first cold storage facility with a capacity of 40,000 tonnes in Shanghai.  The facility “is a first small step to what will be a national network of world-class refrigerated food-handling facilities,” said John Galiher, president and chief executive of PFS, at the opening ceremony of the facility last week.

Building the network will take several years and cost 7bn yuan (US$1.1b), Galiher said. The second facility, which has a storage volume of up to 30,000 tonnes, will open in the Waigaoqiao area of Shanghai in February.

The company also broke ground on a 30,000-tonne facility in Tianjin last month and is set to start work on a facility in Shenzhen, according to Tim McLellan, the company’s managing director of international business.

After reading domestic media reports about contaminated quick-frozen dumplings, “we came to the conclusion that quality control along the whole cold chain is very important for food safety”, said Yuan Yi, general manager of Jimbob (Shanghai) Logistics Co, a logistics and cold chain consulting company.

“The bright side of the dumpling problem is that it will “raise attention about the cold chain.  A single company cannot completely change the whole industry chain, and only by making sure that each stage of the chain is high quality can the food’s safety and quality be maintained,” said Yuan.

The central government has identified three mega-economic zones: the Bohai Bay, the Yangtze River Delta and the Pearl River Delta. McLellan said the company will establish facilities in all three regions, but it will also “follow the market” as inland areas develop.

He said that China’s economy was on track to grow 8.9%, which might be more slowly than in the past, but that the rest of the world was growing at only about 1.5%. Existing cold storage volume could only satisfy 20 to 30% of the market demand causing about $9.25bn of losses during farm product transportation, according to the Economic Daily.