JD.com, China's largest retailer, participated in a signing ceremony held Nov. 8 at the Great Hall of the People, where the company entered agreements to purchase in excess of $1.2 billion of beef from The Montana Stock Growers Assn. (MSGA) and pork from Smithfield Foods Inc. over the next three years. The agreements are part of an overall commitment by JD to purchase $2 billion of U.S. goods across a wide range of categories over three years.
U.S. Secretary of Commerce Wilbur Ross Jr. and China's Vice Premier Wang Yang were in attendance to witness the signing ceremony.
Meat products are a fast-growing category for JD. In the first half of 2017, volume from direct sales of meat on JD increased more than 780% year over year, with imported meat accounting for more than 30% of those sales. Online orders for fresh and frozen meat come chiefly from first and second-tier cities, leaving huge potential for growth in online sales from the rest of the country.
“These groundbreaking agreements bring together two of America’s most trusted and in-demand meat suppliers with China’s leading e-commerce platform, to the benefit of both U.S. producers and Chinese consumers,” said JD chairman and chief executive officer Richard Liu, who participated in the signing ceremony.
He continued, “China’s shoppers will rest assured knowing that they are able to purchase safe, high-quality meat products imported from the U.S., with the fast delivery and ironclad assurance of authenticity that they have come to expect from JD. We look forward to expanding our long-term cooperation with high-quality U.S. meat producers like Smithfield and MSGA.”
JD will import Montana-sourced beef from Cross Four Ranch and MSGA members to China for direct sale to the 258 million Chinese consumers on its e-commerce platform. The procurement agreement is for an initial three years, with a minimum commitment of $200 million in beef to be imported by JD from Cross Four Ranch and MSGA members at fair market value during the term. It is estimated that JD’s purchase of Cross Four Ranch and MSGA beef will increase Montana's beef export sales by as much as 40% in 2018.
“This is a landmark agreement to increase Montana agricultural exports to the fastest-growing overseas market for beef,” U.S. Sen. Steve Daines (R., Mont.) stated. “This is a win for Montana’s hardworking ranchers.”
Beef is the fastest-growing meat sector in China, and the country also is the world’s fastest-growing overseas market for beef following the resumption of American imports earlier this year.
China is the world’s largest producer, consumer and importer of pork. According to official estimates, China's pork imports more than doubled in 2016, reaching a substantial 1.6 million tons shipped.
JD’s extensive cold chain logistics capabilities will ensure that U.S. meat products arrive at customers’ doors safely and rapidly. The beef and pork will be cold chain transported from the U.S. and stored in JD’s own warehouses in China. From there, JD can deliver the product to customers in more than 100 cities across the country within 48 hours – and to many in as few as six hours.
With its complete cold chain solution, JD can monitor the temperature and humidity of products from warehouse to delivery. JD’s cold chain logistics network currently includes 12 cold chain warehouses in China, enabling the delivery of fresh products to customers in 300 cities.