KT&G Corp., the nation’s largest tobacco producer, said Wednesday that it is to launch a ginseng business in the northeastern Chinese province of Jilin.
Seeking to diversify its portfolio, the company has been enhancing its Oriental healthcare business, for which China is considered the world’s largest market.
KT&G signed a memorandum of understanding on Tuesday with the governments of Jilin and Yanbian Korean Autonomous Prefecture.
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KT&G Corp. president Min Young-jin (front row, right) shakes hands with Jilin Province Vice Governor Chen Weigen after signing a memorandum of understanding in China on Tuesday. (KT&G) |
Under the deal, KT&G will begin the construction of a local production plant in September. The firm will inject over 18 billion won ($16 million) in the first-phase for the 100,000 square-meter facility. The local authorities will provide tax benefits and other operational support.
The plant will produce 200 tons of ginseng annually and the capacity will grow to 2,000 tons through further investments, it said.
“This is quite meaningful. The Chinese ginseng market is not only the world’s biggest but also the most prospective,” KT&G said.
KT&G aims at 300 billion won ($260 million) in global ginseng sales by 2016.
The company is optimistic about its new venture which will combine its globally competitive manufacturing technology and indigenous raw materials to cater to local consumers’ tastes.
The size of China’s healthcare product market stood at around 18 trillion won as of last year, and has been growing at an average rate of 13 percent, according to KT&G.
Its new ginseng operation in China will be separately run from the Chinese branch of Korea Ginseng Corp., a wholly-owned subsidiary of KT&G, which is popular for the Cheong Kwan Jang brand.
By Koh Young-aah (
youngaah@heraldcorp.com)
