---
title: "Why Are Food Companies Rushing to Go Public?"
description: "Since this year, especially in June, many food companies have been fighting hard on the road to IPO. Industry analysts say that behind this wave of listings are both policy dividends from national support for private enterprises and lower listing thresholds, as well as operational pressures from consumption upgrades and single-product business models."
author: "周子荑"
publisher: "New Distribution"
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published: "2019-07-15"
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# Why Are Food Companies Rushing to Go Public?

> Since this year, especially in June, many food companies have been fighting hard on the road to IPO. Industry analysts say that behind this wave of listings are both policy dividends from national support for private enterprises and lower listing thresholds, as well as operational pressures from consumption upgrades and single-product business models.

Since this year, especially in June, many food companies have been fighting hard on the road to IPO. A China Business News reporter learned that on June 14, Hua Wen Food Co., Ltd., known for its "Jinzai" brand, disclosed its prospectus. On July 8, dairy giant China Feihe Co., Ltd. made public its pre-listing disclosure. In addition, Three Squirrels Co., Ltd. will ring the bell at the Shenzhen Stock Exchange on July 12. It is worth mentioning that earlier, Youyou Foods and others had already entered the capital market.

**Why are food companies rushing to go public? Industry analysts say that behind this wave of listings are both policy dividends from national support for private enterprises and lower listing thresholds, as well as operational pressures from consumption upgrades and single-product business models.**

**Food companies rush to go public**

In the first half of this year, food companies that either attempted IPOs or successfully rang the bell were "too numerous to enumerate." The wave of food company listings can be described as one after another.

On March 12, the initial public offering application of Sichuan Teway Food Group Co., Ltd. was approved by the CSRC's issuance examination committee. It is reported that Teway Food has attempted to pass IPO review multiple times since its first attempt at the A-share market in 2012, but all failed. Now, this is Teway Food's fourth attempt at IPO review. This also kicked off this year's wave of food companies seeking IPOs.

On May 6, Youyou Foods Co., Ltd. disclosed its prospectus for the initial public offering of shares.

On May 24, Hubei Junyao Great Health Beverage Co., Ltd. published its prospectus.

On June 11, the Shanghai Securities Regulatory Bureau issued the "CITIC Securities' Summary Report on the Counseling Work for Yihai Kerry Arawana Holdings Co., Ltd. (Yihai Kerry Arawana)."

On June 14, Hua Wen Food, known for its "Jinzai" brand, disclosed its prospectus. On the same day, Zhongjing Food Co., Ltd. released its prospectus.

On June 20, Zhejiang Liziyuan Food Co., Ltd. published an announcement on the summary of the counseling for the initial public offering and listing.

On June 28, Liuliu Orchard Group Co., Ltd. published its prospectus for an initial public offering on the ChiNext board. On July 1, Zhejiang Yiming Food Co., Ltd. published its prospectus.

On July 3, China Feihe Co., Ltd. published its pre-listing disclosure documents.

It is worth noting that among this list, some have successfully entered the capital market, while more companies are still fighting their way through the IPO process. A China Business News reporter sorted through the list of food companies seeking IPOs this year and found that these companies can be roughly divided into three categories:

**First, snack food companies including Youyou Foods, Hua Wen Food, Liuliu Orchard, and Three Squirrels;**

**Second, dairy companies including Junyao Dairy, Liziyuan, and Feihe Dairy;**

**Third, two condiment companies: Teway Food and Zhongjing Food.**

In this regard, Zhu Danpeng, a fast-moving consumer goods industry expert, told China Business News that these three sub-sectors are all areas with great future development potential. Specifically, snack food companies face the dividend of consumption upgrades and increased consumer health awareness, and are favored by capital and the market.

In the dairy sector, in recent years, the state has issued a series of documents to revitalize the dairy industry, proposing to strive to stabilize the self-sufficiency rate of infant formula milk powder at over 60% and to maintain the domestic milk source self-sufficiency rate at over 70% by 2020.

The condiment industry is currently developing slowly, which is very mismatched with the booming catering industry, indicating that there is significant room for growth in the future.

**The "catalyst" behind the listings**

Behind the rush of food companies to go public are both policy benefits and operational pressures. In terms of policy, Zhu Danpeng told China Business News that since this year, the state's attitude towards attaching importance to private enterprises has been very clear, and the push from the capital side can provide a new engine for the development of private enterprises. Therefore, the state has given clear guidance for private enterprises to go public.

"And among these, the food industry has strong particularities. As an industry related to people's livelihoods, the food industry is a labor-intensive industry that greatly contributes to regional economic development. The state hopes to boost the growth of categories by supporting sub-sectors of the food industry," Zhu Danpeng said.

In this regard, Xu Bowu, a researcher at Shenzhen Zhongwei Zhiyan Consulting Co., Ltd., also told China Business News that behind the rush of food companies to go public, there is indeed the reason of lowered listing thresholds, because in the past, the food industry was strictly regulated, and stock exchanges would deliberately shelve some food companies' listings, making it difficult for companies to go public.

**Now, the regulatory environment for food company listings has returned to normal levels, because the government believes that strict food circulation supervision should not add obstacles to corporate listings, and it should stimulate market vitality and capital vitality, which has also given food companies that have been backlogged for a long time a strong impetus to go public.**

In addition, the rush of food companies to go public at this time is also due to the critical period the food industry is currently in. Xu Bowu believes that the food industry is now in a critical period with very intense competition. If a company survives, it may develop rapidly; otherwise, it is likely to be eliminated by the market.

Moreover, the entry threshold for the food industry is relatively low, and many companies participate in competition. The key to winning is capital and management. For food companies, going public can solve financing problems, partially solve management issues, and facilitate rapid expansion.

**If policy dividends and industry development mean "timely weather" and "favorable terrain" for food companies to go public, then the operational difficulties of the food companies themselves mean "harmony among people."**

Zhu Danpeng frankly stated that many food companies currently have problems such as single products, categories, channels, scenarios, and consumer groups, which bring great risks to business operations and make it impossible for companies to meet the personalized and diversified needs of young consumers. Therefore, food companies need to use listings to improve their current situation.

A China Business News reporter found that many food companies seeking listings do indeed have the problem of over-reliance on a single product. For example, Liziyuan's prospectus shows that from 2016 to 2018, the sales revenue of its dairy-containing beverages was 426 million yuan, 578 million yuan, and 760 million yuan, accounting for 94.29%, 96.12%, and 96.71% of the company's main business revenue, respectively.

Youyou Foods' prospectus shows that from 2016 to 2018, the sales revenue of its single product, pickled chicken feet, was 630 million yuan, 783 million yuan, and 897 million yuan, accounting for as high as 76.27%, 79.45%, and 81.63% of the company's main business revenue, respectively.

Liuliu Orchard's prospectus shows that the combined revenue of plum products such as green plums accounted for over 85% of main business revenue.

Teway Food's prospectus shows that the revenue from hot pot base and Sichuan cuisine seasoning, two types of seasonings, accounted for over 80% of revenue from 2015 to 2017, and in the first half of this year, it was as high as 90%.

Source: China Business Network


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