[Exclusive] CJ Exits Chinese Tofu Business... Ends Partnership with Beijing's No.1 Ershang

Focus on K-Food Own Brands like Bibigo
Overseas Sales Growth... 'Selection and Concentration'

CJ is exiting the tofu business in China after about 17 years of market entry. Through a joint venture with Ershang (二商) Group, the largest food company in Beijing, CJ once raised its local market share to 90%, but after restructuring, the company plans to focus more on independent brands and products such as Bibigo.

According to Chinese sources on the 24th, CJ CheilJedang fully withdrew its investment last month from the joint venture (JV) 'Beijing Ershang CJ Food,' established in 2007 with local state-owned enterprise Ershang Group, holding 49% and 51% stakes respectively. CJ’s shares were all acquired by Ershang Group. Although the exact sale price was not disclosed, it is known to be in the hundreds of billions of Korean won range. The book value of the company was about 24.9 billion won as of the end of the first quarter.

Eolsang CJ Food's 'Baiwei' tofu. (Photo by Baidu)

The main product lines sold by Ershang CJ Food were soybean processed foods such as tofu and soy milk under the brand 'Baiyu (白玉·Baekok).' In the early stages of the business, it was a dominant brand that raised its market share in Beijing’s tofu market to 90%, and it still holds the industry’s number one position with a market share around 70%. Within the group, the establishment and achievements of Ershang CJ Food have been cited as a representative overseas success case.

The company plans to accelerate its local strategy focusing on independent brands and K-food. Last year, CJ CheilJedang also restructured its local business by selling 60% of its stake in the Chinese food subsidiary Zhishangzhu for 300 billion won.

A CJ China official said, "The tofu business through Ershang CJ Food showed steady sales and operating profit," adding, "This decision aligns with the company’s strategy to focus on its own brands such as Bibigo, rather than due to issues with profit or business environment." Specific sales or operating profit figures of Ershang CJ Food are not disclosed at the request of the joint venture partner, Ershang Group.

Ershang Group, which partnered with CJ CheilJedang, is a representative state-owned enterprise in Beijing and is known as the largest food company in the Beijing area. It has developed the 'Baiyu' brand for nearly 70 years and was once included in the Chinese government’s list of 'Top 400 National Brands.' However, due to the perishable nature of soybean processed foods, Baiyu is limited to distribution only within Beijing. The nationwide tofu market in China grew to $11.91 billion (approximately 16.4953 trillion won) last year, and the standardized packaged tofu market targeted by brands like Baiyu reached $1.5 billion during the same period.

Meanwhile, CJ CheilJedang plans to offset domestic business sluggishness by steadily increasing overseas sales, led by the Bibigo brand. Last year, CJ CheilJedang’s domestic food sales were 5.8782 trillion won, down 0.8% from the previous year, while overseas food sales increased by 4.0% to 5.3861 trillion won during the same period. Market forecasts suggest that the proportion of overseas sales will exceed 50% of total sales this year.