Chocolate comes to China

SUZHOU, China – In a cavernous white building filled with huge bubbling vats, clattering conveyor belts and the luscious aroma of melted chocolate, a Swiss tradition is being transplanted, cocoa butter block by cocoa butter block.

Swiss chocolate maker Barry Callebaut opened a $20 million factory in the eastern Chinese city of Suzhou on Wednesday, a move aimed at capturing the growing regional taste for chocolate and other sweets – by supplying chocolate and production facilities to brand manufacturers.

Zurich-based Barry Callebaut claims a 25 percent share in the market for the raw chocolate that is processed into candy bars, cocoa and pastries, or as the company’s CEO Patrick De Maeseneire puts it, “one in every four bites of chocolate in the world.”

China’s own huge market, and its role as world supplier of just about everything, from tennis shoes to laptop computers, has made it a prime destination for legions of business-to-business suppliers.

As increasingly affluent Chinese and other Asians indulge their taste for luxury treats, companies like Barry Callebaut are shifting operations eastward to cut costs and hone their competitive edge in supplying manufacturers based in China.

“Only with this Chinese production we are a truly global company,” Andreas Jacobs, the chocolate maker’s chairman, said at the factory’s opening ceremony.

Barry Callebaut has assets ranging from cocoa production facilities in Africa to retail candy brands in Europe and the United States. The company partners with major manufacturers such as Japan’s Morinaga & Co., Cadbury Schweppes PLC, Nestle SA and Pennsylvania-based Hershey Co.

Barry Callebaut SA opened its first Asian factory in 1997, in Singapore, but decided in 2005 that it had to have a presence in mainland China if it wanted to remain a top global player. In 2006, it settled on building the factory in Suzhou. The factory began operations just a year later.

The wholly-owned factory is the chocolate maker’s first in China and is part of a strategy aimed at significantly expanding in Asia.

The company’s China sales – measuring chocolate products made in Singapore and imported to China – rose 20 percent in the fiscal year that ended Aug. 31, to 4,300 metric tons. The Suzhou factory is expected to churn out 10,000 tons of chocolate in its first year of production, with 6,000 tons to be sold in China and the remaining 4,000 to be exported

The allure of the China market is such that the company appears to have been unswayed by the uproar over product quality safety last year.

Barry Callebaut’s 38 factories in more than 20 countries maintain the same quality standards as in their home factories in Europe, said CEO Patrick de Maesoneire.

“Food safety is a primary objective,” he said. “All raw materials are tested and sampled. All products are tested and sampled and must pass before they leave the factories.”

Chocolate processed at the Suzhou factory is made from imported cocoa; China has no domestic production. The milk used comes from Switzerland, because if the consistency of the milk used varies, the color of the chocolate changes and customers complain, staff said.

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