---
title: "Synear and Three Squirrels Build Overseas Factories, Increasing Pressure on Domestic Companies?"
description: "On November 8, 2017, Synear Foods officially started construction of its factory in Los Angeles, USA, mainly producing traditional star products like dumplings and fried dumplings. Three Squirrels also established a factory in Australia recently, and Panpan Foods and Wanglaoji have proposed overseas factory plans. In recent years, foreign companies have entered the domestic market through acquisitions or direct factory construction, coupled with rising raw material and labor costs, and increasingly stringent environmental requirements, some companies have been forced to shut down during environmental assessments. Facing these pressures, a group of companies has begun to look overseas and build factories abroad."
author: "桂圆"
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published: "2018-02-27"
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# Synear and Three Squirrels Build Overseas Factories, Increasing Pressure on Domestic Companies?

> On November 8, 2017, Synear Foods officially started construction of its factory in Los Angeles, USA, mainly producing traditional star products like dumplings and fried dumplings. Three Squirrels also established a factory in Australia recently, and Panpan Foods and Wanglaoji have proposed overseas factory plans. In recent years, foreign companies have entered the domestic market through acquisitions or direct factory construction, coupled with rising raw material and labor costs, and increasingly stringent environmental requirements, some companies have been forced to shut down during environmental assessments. Facing these pressures, a group of companies has begun to look overseas and build factories abroad.

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On November 8, 2017, Synear Foods' factory in Los Angeles, USA, officially started operations, mainly producing traditional star products such as dumplings and fried dumplings. Three Squirrels also established a factory in Australia recently, and Panpan Foods and Wanglaoji have proposed overseas factory plans.
In recent years, foreign companies have continuously entered the domestic market through acquisitions or direct factory construction. Coupled with rising raw material and labor costs, and increasingly stringent domestic environmental requirements, some companies have been forced to shut down during environmental assessments. Facing these pressures, a group of companies has begun to turn their attention abroad and build factories overseas.
However, building factories overseas is not a smooth path. Different dietary and consumption habits create different markets. For example, Lotus MSG also proposed building a factory in Australia but ultimately failed. Some companies, even after building factories overseas, still find it difficult to enter local mainstream sales channels; most sell through Chinese restaurants, Chinese community stores, or Chinese specialty stores, with the vast majority of consumers being Chinese.
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■ Source: Condiment Business Circle (ID: twpsq0909)
1
**********Inventory of Benchmark Condiment Companies with Overseas Factories******
**▼**
**Case 1: Lee Kum Kee**
Lee Kum Kee built a factory in Los Angeles, USA, in 1991.
Since its founding in 1888, Lee Kum Kee has developed continuously for 129 years, with over 200 products sold in more than 100 countries and regions, truly achieving "where there are people, there is Lee Kum Kee."
Lee Kum Kee is headquartered in Hong Kong, with factories in Hong Kong, the United States, Malaysia, Xinhui (Guangdong), and Guangzhou (Guangdong), and subsidiaries in over a dozen countries, making it a truly multinational company.
One important reason Lee Kum Kee chose to enter the U.S. market is that the U.S. is the second-largest聚居地 of Chinese people globally, with approximately 3.8 million Chinese Americans, accounting for 1.2% of the U.S. population. Chinese Americans are the base for Lee Kum Kee's U.S. market expansion and a step toward the Western world. Clearly, Lee Kum Kee aims not only at Chinese consumer areas but also expects to further enter the mainstream consumer market.
After more than 20 years of U.S. market presence, Lee Kum Kee holds 88% of the U.S. oyster sauce market, while adopting a differentiation strategy to gain a larger market share.
Lee Kum Kee is widely involved in the Asian and mainstream retail, restaurant, and industrial markets in the U.S. Currently, after two expansions in 2006 and 2017, the Lee Kum Kee U.S. factory covers a total area of 18,000 square meters, has over 10 production lines, and employs 300 staff, with products widely covering all areas of Chinese and non-Chinese restaurants and retail across the U.S.
Starting with oyster sauce and using soy sauce to capture the mainland market, Lee Kum Kee's first sauce to enter the U.S. market was Sriracha chili sauce, representing Asian flavors. After receiving positive market feedback, Lee Kum Kee established a mayonnaise and sauce line in 2015.
Lee Kum Kee also drew on its experience in the mainland market: capturing the restaurant market. Its cooperation with the well-known Chinese fast-food chain Panda Express has lasted over 20 years, from fewer than 300 stores then to over 2,000 stores across the U.S. today, combining the most popular Chinese dishes with local characteristics, gradually bringing them to mainstream American tables.
**Case 2: Angel Yeast**
At the end of 2010, Angel Yeast's Egypt factory broke ground.
In September 2015, Angel Yeast's Russia factory started construction.
As early as the 1990s, Angel achieved product exports through trade company agency exports. In 2008, Angel completed its domestic yeast production layout of "East, West, South, North, Center," expanding through mergers, new construction, and expansion, becoming the world's largest supplier of high-active dry yeast and yeast extract.
In 2015, Angel's export revenue reached 1.388 billion yuan, accounting for 33% of total company revenue. Internationally, Angel Yeast has entered the top three, becoming an important force influencing the global yeast industry pattern.
The success of Angel Yeast's Egypt factory provided a replicable model for Angel's international manufacturing. In September 2015, the Russia Angel factory started construction, called "Russia's most advanced yeast factory and Angel's most advanced factory," and is now in operation. In addition to overseas factories, Angel products have quickly opened markets in over 150 countries and regions, including the U.S., Japan, and the EU. Currently, all developed country markets have been entered.
There were many reasons for choosing Egypt for the factory: proximity to raw materials (Egypt is rich in sugarcane and sugar beet, with abundant molasses resources for yeast industry); large market capacity (Egypt and surrounding market capacity exceeds the factory's production capacity); low energy costs (natural gas in Egypt is cheaper than coal in Yichang); and tariff advantages.
The Egypt factory went through more than three years of investigation and feasibility studies. After field visits to Russia, Brazil, Thailand, Turkey, Egypt, and Vietnam, in 2009 it was initially decided to build the first overseas factory in Egypt.
Building factories abroad also requires adapting to local customs. For example, religious beliefs are sensitive in Egypt. To adapt to local culture, Angel built prayer rooms at its Cairo headquarters and the Denis Weaver factory. Additionally, company management must understand local history, culture, and religion.
**Case 3: Zhenji Group**
In May 2000, with the establishment of American Zhenji Condiment Company, Zhenji Group became the first condiment enterprise from mainland China to establish a presence in the U.S.
Starting from restaurants, then opening channels in grocery stores, and later entering American white supermarkets and contacting several major agents, all cultivated a good market environment for Zhenji products in the U.S.
Seeing the huge potential of the international market, Zhenji, based in the U.S., gradually extended its reach to Australia, Singapore, Russia, the Middle East, and Hong Kong.
They set their first overseas factory target in the U.S., where at that time there were only four soy sauce breweries: three Japanese and one from Hong Kong. Data shows that U.S. soy sauce consumption in 1997 was 200,000 tons, with imports of 38,499 tons; in 1999, imports were 42,368 tons, an increase of nearly 4,000 tons from 1997. Building a factory in the U.S. established a bridgehead for gradually expanding international market share.
They sent three groups to the U.S. for investigation, conducted market research through online surveys, user meetings, and visits to agents and grocery store operators, and after repeated feasibility studies by experts and scholars, formulated an investment plan. In January 2000, the Ministry of Foreign Trade issued an overseas investment approval certificate to Zhenji Group, and the "American Condiment Food Company" with an annual output of 6,000 tons of soy sauce and 600 tons of cooking wine began production.
2
**What Should Condiment Companies Do When Building Factories Overseas?**
**▼**
In the international condiment market, Japan's Kikkoman has always been a major competitor for domestic companies, occupying most of the soy sauce market in Europe and the U.S. Now nearly 60% of American households use soy sauce, but the market share of Chinese soy sauce products in the U.S. is still not high.
As the pioneer of overseas factory construction for condiment companies, Japan's soy sauce giant Kikkoman has been most successful in opening the U.S. market: first exporting from Japan to the U.S., establishing a certain scale, then setting up a factory in the U.S., and after success, replicating the experience globally.
**Step 1: Have a certain customer base and plan ahead**
For the U.S. market, Kikkoman's history dates back to 1868 when it began selling soy sauce to Hawaii and California for local immigrants, establishing a customer base.
In 1957, Kikkoman merged with the Pacific Trading Company and established Kikkoman U.S. Marketing Company in San Francisco, still using recipes and cookbooks as its basic marketing tools.
**Step 2: Educate U.S. food brokers and cooperate with large chain restaurants and supermarkets**
At the same time, learning from its marketing lessons in Japan, Kikkoman actively educated U.S. food brokers (who have significant influence in the U.S. retail market), cooperated with large chain restaurants and famous fast-food outlets, and even decisively bought advertising slots on major networks during the U.S. presidential election, immediately securing orders from Safeway, the largest chain food supermarket at the time, rapidly boosting sales.
**Step 3: Build own restaurants to cultivate consumers**
After assessing that U.S. sales volume was sufficient to absorb factory construction costs, in 1973 Kikkoman established the largest soy sauce factory in the Western world in Walworth, Wisconsin.
At the same time, Kikkoman took steps into Europe. In the early 1970s, it opened six Japanese teppanyaki steakhouse chains in Germany, bringing consumers into restaurants to taste dishes cooked with Kikkoman seasonings. In April 1996, it established its first factory in the Netherlands, gradually advancing its global expansion.
Additionally, Kikkoman places great importance on cultivating the market, insisting for years on holding free tasting events for soy sauce-marinated meat products in large shopping malls, and often giving nearby residents exquisite recipe books, promoting the history, nutritional value, and usage of soy sauce, subtly influencing American cooking habits.
**Step 4: Change formulas to suit local tastes**
Kikkoman is adept at changing soy sauce formulas according to American tastes, adjusting for the American preference for slightly sweeter flavors.
In the 1970s, when Kikkoman built the largest soy sauce factory in Europe and the U.S. in Wisconsin, local Americans "could hardly distinguish soy sauce from Indian ink." Kikkoman required Japanese employees to live scattered in various American communities in Wisconsin, learn English with locals, and send all common American ingredients back to Japan for research to develop soy sauce and other seasonings best suited to local tastes.
**Step 5: Be sensitive to trends and quickly respond to changes in consumer preferences**
Kikkoman maintains sensitivity to trends, even quickly responding to changes in consumer preferences from popular movies. It innovatively assessed the most adventurous consumers nationwide, ranking them as the U.S., Australia, Germany, the Netherlands, etc. This allowed it to boldly promote its innovative and derivative new seasoning products in the U.S., including teriyaki sauce, sukiyaki marinade, tempura mix, stir-fry sauce, teriyaki barbecue sauce, and sweet and sour sauce.
In this way, Kikkoman's overseas sales and revenue have both exceeded its domestic Japanese market. Kikkoman's fiscal year 2014 report shows that overseas sales accounted for 55% of total company sales, and overseas operating profit accounted for as much as 81%. Among them, 75% of overseas sales and 67% of overseas revenue came from the U.S. Soy sauce alone contributes approximately $2 billion in sales annually to Kikkoman.
In contrast, except for a very few brands of Chinese condiments that have entered local mainstream sales channels abroad, most are sold through Chinese restaurants, Chinese community stores, or Chinese specialty stores, with the vast majority of consumers being Chinese. Therefore, the road for Chinese condiments to expand overseas is still quite long.


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