---
title: "Wan Long: Pork Price May Drop to 8 Yuan per Jin by Year-End; What Is Shuanghui Doing Behind This?"
description: "In 2016, Shuanghui has been a hot topic regarding pork. On August 22, Wan Long, Chairman of Shuanghui Group and Chairman and CEO of WH Group, stated at a press conference that pork prices are expected to continue falling to 16 yuan per kilogram by the end of this year, with the decline lasting into next year. In fact, this is not the first time Shuanghui has publicly talked down the pork market. In March this year, Shuanghui executives had already made remarks about \"excessive pork prices\" and stated that in terms of nutrition and health, Shuanghui's American-style products far surpass Chinese-style products, which sparked criticism from pig farmers. Shuanghui: Importing 300,000 Tons of Pork Annually..."
author: "食经济"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-09-02"
language: "en"
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---

# Wan Long: Pork Price May Drop to 8 Yuan per Jin by Year-End; What Is Shuanghui Doing Behind This?

> In 2016, Shuanghui has been a hot topic regarding pork. On August 22, Wan Long, Chairman of Shuanghui Group and Chairman and CEO of WH Group, stated at a press conference that pork prices are expected to continue falling to 16 yuan per kilogram by the end of this year, with the decline lasting into next year. In fact, this is not the first time Shuanghui has publicly talked down the pork market. In March this year, Shuanghui executives had already made remarks about "excessive pork prices" and stated that in terms of nutrition and health, Shuanghui's American-style products far surpass Chinese-style products, which sparked criticism from pig farmers. Shuanghui: Importing 300,000 Tons of Pork Annually...

In 2016, Shuanghui has been a hot topic regarding pork. On August 22, Wan Long, Chairman of Shuanghui Group and Chairman and CEO of WH Group, stated at a press conference that pork prices are expected to continue falling to 16 yuan per kilogram by the end of this year, with the decline lasting into next year.
In fact, this is not the first time Shuanghui has publicly talked down the pork market. In March this year, Shuanghui executives had already made remarks about "excessive pork prices" and stated that in terms of nutrition and health, Shuanghui's American-style products far surpass Chinese-style products, which sparked criticism from pig farmers.
**Shuanghui: Importing 300,000 Tons of Pork Annually**
According to Shuanghui, they will import 300,000 tons of pork this year, while China's total pork imports will exceed 1 million tons, with Shuanghui accounting for one-third.
There has long been a price difference between pork in China and the US. Currently, US imported pork prices are much lower than domestic pork prices, and increasing imports will contribute more significantly to smoothing costs and boosting profits. Wan Long stated that the company will import 300,000 tons of pork from the US this year to reduce costs. "In terms of cost, the raw material cost per ton of domestic air-dried meat is 30,000 yuan, while the raw material cost for US air-dried meat is 22,000 yuan, reducing costs by 5,000 to 8,000 yuan per ton. Increasing US pork imports is beneficial for lowering costs."
In 2016, the volume of pork imports nationwide increased significantly, but it ultimately failed to affect the decline in pork prices.
According to statistics, from January to July 2016, China's cumulative pork imports reached 945,700 tons, a 150% increase compared to the same period in 2015. Among them, monthly pork imports were far higher than in 2015; in 2015, China's pork production was 54.87 million tons, while total pork imports in 2015 were 1.55 million tons, less than 3% of China's pork production. This amount is not enough to affect pork prices, but if imports are concentrated in certain enterprises, due to low foreign pork prices, it will significantly reduce corporate costs.
**"Excessive Pork Price Theory" May Not Align with Market Supply and Demand**
At the end of March this year, Wan Long had already stated that domestic pork prices were ridiculously high, and he believed that the reasonable price for pork in 2016 should be around 15 yuan per jin. Shuanghui Development President You Mu also said: "Mainland pork prices are the most expensive in the world!"
Shuanghui executives successively published the "excessive pork price theory," which instantly ignited discussions inside and outside the industry. While domestic pig farmers voiced criticism, the media also expressed their views. Some agreed and supported Shuanghui, while others believed Shuanghui was taking advantage of the situation. For a time, various social platforms such as WeChat, Weibo, and websites sparked multi-party debates, and after more than a month, the storm subsided slightly.
Looking back at when Shuanghui executives published the "excessive pork price theory," domestic and foreign three-yuan pig prices were already at a high level above 19 yuan per kilogram. Although farmers were uneasy, pig prices, as if using all their strength, continued to hit historical highs.
By early June, they reached a historical high of 21.2 yuan per kilogram. Since then, although pig prices once experienced a sharp drop, the stage bottom of 18 yuan per kilogram remained unbreakable. In early August, pig prices showed tentative increases, giving the market some confidence. Recently, the pig market has entered a stable adjustment phase, with pig prices stabilizing around 18.5 yuan per kilogram.
The latest inventory data from the Ministry of Agriculture also shows that in July, both pig inventory and breeding sow inventory declined month-on-month, market capacity continues to be reduced, and supply will continue to tighten in the later period. At the same time, the upcoming Mid-Autumn Festival, National Day, and even the New Year and Spring Festival at the end of the year will drive some pork demand. The market generally believes that with the start of later demand, pig prices will likely resume their upward trend.
We cannot predict exactly how much pig prices will reach, or whether Shuanghui's judgment of 16 yuan per kilogram is correct, but in the short term, due to lower feed prices, even if pig prices reach 16 yuan per kilogram, pig farming will still be profitable. But when exactly pig prices will bottom out remains unknown.
**Does the Rise and Fall of Pig Prices Have No Impact on Shuanghui?**
Overall, for Shuanghui, whether pig prices rise or fall does not significantly affect the company's performance.
In the first half of this year, Shuanghui Development achieved revenue of 25.527 billion yuan, a year-on-year increase of 25.41%, and net profit of 2.151 billion yuan, a year-on-year increase of 8.51%. In the first half of 2015, pig prices were still at a low level overall, and Shuanghui Development's revenue and net profit both declined, putting enormous operational pressure on the company and forcing Shuanghui to accelerate transformation.
From the slaughter business perspective, in the first half of 2015, pig prices fell, and Shuanghui Development slaughtered 6.2045 million pigs, a year-on-year decrease of 19.1%; in the first half of this year, Shuanghui Development slaughtered a total of 6.21 million pigs, a year-on-year increase of 0.09%. During the same period, national pig inventory and slaughter numbers declined significantly, pig prices rose, slaughter enterprises generally faced pressure, the slaughter industry accelerated reshuffling, small and medium-sized slaughter enterprises accelerated their exit, while Shuanghui seized the opportunity to expand market share, further consolidating its leading position in the industry, which can be described as a clear benefit.
From the meat products business perspective, in the first half of 2016, Shuanghui Development's external sales of fresh, frozen meat and meat products reached 1.4402 million tons, a year-on-year increase of 11.16%. In the first half of the year, the company's meat products business operating costs decreased by 5.8%, and gross profit margin reached as high as 32.39%, far exceeding the industry level, mainly due to the large-scale import of low-priced US pork. In the first half of this year, Shuanghui sold 120,000 tons of imported pork externally, equivalent to 18% of total sales in the period, and for the full year, Shuanghui will import 300,000 tons of pork from the US, meaning imports will continue to increase significantly in the second half.
For Shuanghui, since acquiring Smithfield, in terms of raw material procurement, the complementary advantages of the two resources have placed it in an invincible position of being able to withstand both drought and flood. This advantage is not available to other meat product enterprises. However, according to investigations and reports by relevant media, **high-end Smithfield products have been cold-shouldered in the market, being accused of not adapting to local conditions.**
Regarding Shuanghui's "talking down" the pork market, one detail is worth noting: In March, when Shuanghui executives published the "excessive pork price theory," what sparked heated discussion was not just price, but also quality. That is, "in terms of nutrition and health, Shuanghui's American-style products far surpass Chinese-style products, mainly because all raw materials are imported from the US." To be precise, this was the most important point that angered pig farmers. However, this time, Shuanghui Chairman Wan Long again made similar remarks, but "**only talked about pig prices, not quality**." The reason seems to have deeper meaning.
Source: Food Economy
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