Cross border acquisition behind a canned tuna

In Vigo, a Spanish seaport city over 10000 kilometers away from Shanghai, the new factory of Albo Company continuously produces canned tuna from the assembly line.

On the ledger displayed in the factory museum, nearly a century has passed and the ink is still clear. Albo, a brand with a history of 155 years and well-known in Spain, was acquired by Kaichuang Group, a wholly-owned subsidiary of Shanghai Fisheries Group under Guangming Food Group, 8 years ago.

Overseas mergers and acquisitions often mean changes in the management and product style of the enterprise. But at Albo Company, from executives to employees, most of them are the same team, and the products still continue to have a century old flavor. At the celebration event, local politicians praised Shanghai Fisheries Group for continuing its good business and injecting new vitality. They look forward to promoting cooperation with Bright Food Group, which has a complete food industry chain, in more fields.

How can Chinese enterprises achieve simultaneous improvement in both quantity and quality after going global? The exploration of Shanghai Fisheries Group may be an inspiration for the development of enterprises after cross-border mergers and acquisitions.

Acquisition: Completing the entire industry chain

The tropical waters of the Central and Western Pacific are the world's largest tuna fishing area, attracting fishing vessels from all over the world. Tunas swim fast and have strong migratory abilities. They are active in the deep sea during the day and only approach the surface to hunt at night, which poses challenges to fishing equipment and techniques.

Since the 1980s, Shanghai Fisheries Group has been venturing into the deep sea and catching large fish. Currently, it has the largest tuna purse seine fishing fleet in China, with 11 fishing vessels operating year-round in the central and western Pacific Ocean, with an annual catch of 90000 to 100000 tons. Previously, most of the tuna caught were wholesale in their original form.

A few years ago, Shanghai Fisheries Group invested in the construction of Zhoushan Huantai Marine Food . in Daishan, Zhejiang. A portion of the caught tuna was processed into fish fillets and sold as intermediate products. But a closer link to consumers - deep processing of seafood products, is still lacking.
In 2014, Spanish company Albo entered the field of Shanghai Fisheries. This is a food processing enterprise with a history of nearly 150 years, mainly producing canned aquatic products such as yellowfin tuna and longfin tuna. If it can be acquired, Shanghai Fisheries can have the terminal product of tuna.

However, at the beginning, this acquisition was not well received. Wang Yong, an advisor to the board of directors of Albo who personally experienced the acquisition process, told reporters that at that time, the shareholders of Albo Company had different opinions on the transfer of corporate equity, and there were other parties in negotiations and participating in the bidding.

After about a year of contact, negotiation, and a series of tedious procedures, Wang Yong still remembers the day when the delivery procedures were completed, which was June 10, 2016. Over sixty original shareholders of varying ages sat in a huge conference room, waiting to sign various documents required for share delivery and collect their respective checks. That day, we had to complete the board changes, and a group of local media reporters had to meet with the new chairman to discuss. Such a large-scale acquisition may be unprecedented in this small city of Vigo.

"The acquisition of Albo has helped us complete the entire industry chain from tuna fishing, transportation, rough processing, to precision processing, "said Wang Haifeng, President of Shanghai Fisheries Group. 

New factory: Capacity orders increase simultaneously

The completion of the acquisition is just the beginning.

As the executing entity of this cross-border merger and acquisition, Deng Hu, Vice President of Shanghai Kaichuang International Marine Resources ., admitted that he also had some worries when he first took over the management of a company that is 100% composed of local Spanish employees. The first problem encountered is how to establish trust between the Chinese management and local employees.

In October 2016, Shanghai Fisheries Group led a delegation of Chinese entrepreneurs to visit the Galicia region and made a firm commitment to the regional president of "three unchanged and one changed". "Three unchanged" means not laying off employees and fully guaranteeing employment, not changing employee salaries, and not changing product quality. "One changed" will focus on helping local enterprises and products increase their international market share, bringing broader development prospects to Albo and the local area. The Chinese management stationed in the local area actively implemented this heavy commitment and the determination to build trust and jointly pursue development step by step. After a smooth handover in the first three years, Albo, under the management of Chinese capital, began to enter the fast lane. The company's revenue scale showed a year-on-year growth trend, and its profitability significantly improved compared to the operating period of the old shareholders.

In order to actively address the practical problems of limited development space and aging production facilities in the area where the old factory is located, Shanghai Fisheries Group has decided to increase investment and build new factories with larger scale and higher efficiency to meet the development needs of the new stage. The new factory will complete the project completion acceptance by the end of 2022 and immediately put into trial operation.

The new factory has expanded its area to twice that of the original factory, reaching 24000 square meters. This has enabled various types of canned food production lines that were once intertwined to return to their respective positions, resulting in a significant increase in production capacity and efficiency. The advanced automatic can sealing machine has replaced the previous manual can sealing machine. "The restructuring of the production line and the advancement of technology have reduced costs and improved efficiency," said Juan, the production and operation director of Albo. Before the new factory was built, the total number of workers in the two old factories was 240, with an annual production capacity of about 70 million cans. After moving to the new factory, the number of employees is currently 210, with a peak of 260 people, and the annual production capacity has increased to 100 million cans.
 
This has earned Albo certification from IFS Food, one of the most authoritative certification marks in the global food industry. After obtaining IFS certification, we successfully opened up the US market this year and received orders of up to 1 million euros from local customers. At the same time, this certification played a key role in breaking through the markets of European countries such as France, Austria, and Slovakia. Deng Huxing said that Albo's revenue target for this year is to exceed 100 million euros.

Integration: grasping new trends in consumption

Olive oil is almost irreplaceable in the production of canned tuna products. Due to extreme weather conditions such as drought, Spain, as the world's largest producer and exporter of olive oil, has experienced a continuous decline in olive oil production for several years. In the second half of 2023, olive oil prices began to soar, with prices increasing by 37% in August compared to the same period last year, and even reaching a staggering 51% increase in November.

As the chief representative dispatched by the company's shareholders, Deng Hu felt that the rising costs posed a huge challenge to the enterprise. After consultation with headquarters, Albo Company has further increased its investment in product research and development and innovatively launched a new product that uses sunflower seed oil instead of olive oil.

In recent years, Guangming Food Group and Aquaculture Group have frequently sent colleagues to Spain to learn about the new Albo factory and listen to its production and operation situation. We have several hours of meetings every time, and the leaders of each management team and line have given very serious feedback, conducted internal discussions on the difficulties and challenges encountered, and actively discussed how to deal with them in the next step, "said Wang Haifeng, President of Aquaculture Group.

What impressed Wang Haifeng the most was the new trend in the consumer market. Previously, we used to say that products were king, but now it's channels that are king. Our main sales targets, such as some chain supermarkets or large food supermarkets in Spain, are gradually adjusting their strategies and creating some own and self operated brands. In fact, it's the same in Shanghai where new retail enterprises rely on channel advantages and their own brands have emerged

At present, the main consumer market for Albo products is still in Europe. The new factory is adjacent to the highway, and trucks transporting canned tuna can reach major supermarkets in the center of Madrid in just five or six hours. There is a dazzling array of canned products on the food shelves, with Albo Company's canned tuna placed in the most prominent position.
 
The aquaculture group is also actively exploring the domestic market. Wang Haifeng introduced that transforming self harvesting raw materials into marketable end products needs to constantly meet countrymen's consumption preferences for marine food. We have seen new consumption opportunities, such as in canned fish, overseas returnees, mothers, and fitness enthusiasts are all potential consumer groups that can be tapped

Over the past 8 years, family brands with European heritage have continuously integrated and collaborated with Chinese business managers. In the future, more and more tuna from the central and western Pacific will cross the globe and reach the dining tables of Chinese consumers through global industrial division of labor from fishing to processing.