Dehong Ruili Imported Agricultural and Sideline Products Intensive Processing (Whole Grain, Baked and Instant Food) Project

Project Name

德宏州瑞丽市进口农副产品精深加工（粗粮食品、烘培及方便食品）项目

Dehong Ruili Imported Agricultural and Sideline Products Intensive Processing (Whole Grain, Baked and Instant Food) Project

Project Industry

Food and Consumer Goods Manufacturing Industry

Project Site

International Import and Export Biological Industry Park in Wanding, Ruili

Project Overview

Taking the opportunity of building the Dehong district as part of the China (Yunnan) Pilot Free Trade Zone, leveraging Ruili’s channel advantages and location advantages, and utilizing Myanmar’s rich resources in the aspects of agricultural and sideline products as well as domestic auxiliary materials, the project is mainly designed for the on-site processing of imported agricultural and sideline products in the Wanding Biological Industrial Park near the port in the country. The products range from functional and healthy convenience foods to coarse grain products (such as meal replacement bread, cakes, biscuits and coarse grain beverages).

Project Construction Content

Project positioning: Relying on China-Myanmar industrial-capacity cooperation, it will be built into a base for the processing of imported agricultural and sideline products and a demonstration project for agricultural products import and export processing.

Construction idea: Based on the development of China-Myanmar capacity cooperation, foreign-invested enterprises adopt the model of "raw materials abroad, processing in Dehong, and facing domestic and foreign markets", renting standardized factories or self-built factories in Wanding International Import and Export Biological Industrial Park in Ruili City , make full use of the advantages of local labor and raw materials, develop intensive processing trade of imported agricultural products, and build the project into a modern industrial park integrating processing, exhibition, transaction, warehousing and logistics of imported agricultural products.

Content of construction: to build the storage area for raw materials and finished products, food production line and processing area, testing area, logistics distribution sales area and comprehensive service area, etc.

Designed type of operation:

Raw material storage area: used to store raw materials for agricultural and sideline products needed for food production

On-site production and processing area: production lines for raw material screening, cleaning, crushing, squeezing, mixing, filling, packaging, and delivery

Finished product storage area: an area used for the storage of finished products

Management area: administrative office, conference room, reception office, product design area

Living area: dormitory buildings for workers and managerial staff

Floor space: 6.7 hectares

Supporting Conditions

Factors Guarantee

Supply of raw materials is guaranteed: There is sufficient supply of raw materials in the prefecture to meet the demand of on-site processing enterprises. Dehong Prefecture is rich in geothermal resources and is known as the "Kingdom of Plants" and "Species Gene Bank". Thanks to years of development and construction, it has become an important production base for coffea arabica, lemons, nuts, aromatic tobacco, and high-quality rice in China. Dehong is designated as the permanent venue for the Asian Coffee Annual Conference, and is also known as the most suitable place for human habitation. It is a paradise for tourism, leisure and health. Dehong Prefecture is also an important food production base in Yunnan, which completed a total sown area of 1.897 million mu of grain crops and achieved a total grain output of 660,000 tons in 2019 including a rice output of 376,800 tons, a wheat output of 6,300 tons, a corn output of 196,000 tons and a bean output 11,000 tons; As of 2017, Dehong has become the only prefecture of grain net export in Yunnan for 10 consecutive years. The total amount of grain export in 2017 exceeded one-tenth of the total amount imported in Yunnan from other provinces. There is sufficient supply of raw materials in the prefecture to meet the demand of on-site processing enterprises. In 2019, Ruili imported green beans, fructose, black sesame seeds, shrimp shells, peanuts, fresh onions and other agricultural and sideline products from Myanmar with a trading volume of around RMB 3 billion. In 2019, China increased the import quota of rice from Myanmar to 400,000 tons, and it is expected that Myanmar’s rice exports to China will reach 200,000 to 250,000 tons in 2020.

The development of border trade is guaranteed. Dehong District made full use of its advantages of being close to the border and actively promoted the development of international cooperation in agriculture, forestry, animal husbandry, sideline production and fishery. In the border market at Ruili Port, the imported products are mainly agricultural products. The border trade volume at Ruili Port has maintained a sustained and steady growth in recent years. The border trade volume at Ruili Port was RMB 4.97 billion in 2019, an increased of 22% compared with the same period last year; the cumulative number of border residents participating in trade was more than 598,700, up 22.96% year-on-year. Ruili City, where Dehong District is located, was approved by the Ministry of Commerce to be included in the first batch of pilot counties and cities for on-site processing of border trade commodities on May 19, 2020, the relevant favorable policies following which will also facilitate further development of the processing industry featured by the border region  in Dehong District.

Guarantee of labor force: Ruili is rich in surplus labor resources in rural areas, and the monthly salary standard is RMB 2,500 to 3,500

The monthly salary of Burmese migrant workers is RMB 1,200 to 2,000, which is lower than that of Laos, Vietnam, Cambodia and other countries.

二、Investment Advantages

Regional advantage: Ruili is located on the border of western Yunnan, which is the most convenient export from China to the Indian Ocean by land and China's largest land port in the trade with Myanmar. On August 30, 2019, Dehong district of China (Yunnan) Pilot Free Trade Zone was formally put into operation. Ruili Port and Wanding Port became the first designated ports for imported grain in the country; Wanding Port became the only designated port for the import of "non-ready-to-eat" chilled products in Yunnan Province; The Nongdao Channel of Ruili Port is a pilot channel for importing beef cattle for slaughter; Ruili is located at the intersection of the Greater China Economic Circle, the South Asian Economic Circle, and the ASEAN Economic Circle. It is an important hub and junction for the country to implement the "Belt and Road" initiative, promote the construction of the Bangladesh-China-India-Myanmar Economic Corridor, and build a radiation center facing South Asia and Southeast Asia.

Transportation advantages: Highway: Taking national and provincial highways as the mainline and centering on the urban area with municipal and rural roads serving as branch lines, Ruili has formed a road network connecting Wanding and Mangshi to Kunming in the east, Myanmar’s Mangyun to Bamo in the west, Myanmar’s Muse, Nankan to Lashio and Yangon in the south, and Longchuan, Tengchong to Baoshan in the north.

Railway: The Dali-Ruili Railway under construction will go directly to Ruili via Dali and Baoshan. In the future, it will directly connect the sea gate of the Indian Ocean in Myanmar.

Advantages of on-site processing: The locally processed imported goods only account for 2.6% of the total import volume as there are only 10 local enterprises are engaged in the intensive processing of agricultural and sideline products. Most of the raw materials are shipped to the inland for processing, leading to a big loss of added-value and higher transportation costs; Ruili is rich endowed as a natural port with abundant imported raw materials, which allows on-site processing to realize the value conversion of the raw materials and avoid any material loss during transportation. At the same time, on-site processing ensures the freshness of food and raw materials and maximizes the nutritional content.

Myanmar’s Certificate of Origin: As one of the least developed countries in the world, Myanmar enjoys the GSP treatment under the WTO framework. Ruili is stepping up the implementation of the China-Myanmar border zone project and speeding up the establishment of overseas industrial parks. If enterprises set up factories in the park for processing and manufacturing and accumulatively achieve a processing ratio of 35% (including labor, water and electricity, etc.), the Myanmar certificate of origin will be obtained. Japan and EU countries give zero tariff treatment to Myanmar textiles.

Investment Estimate and Fund Raising

Investment estimation: The investment is estimated to be RMB 275 million, which is mainly used for plant construction or renting, production line purchase and installation, raw material procurement, employee wages, and business operations.

Fund raising: Self-raised by enterprises, bank loans, and other ways of financing.

Preferential Policies Applicable

Several Opinions of the CPC Central Committee and the State Council on In-depth Implementation of the Western Development Strategy (ZF [2010] No. 11): Enterprise income tax will be levied at a reduced rate of 15% on the industrial enterprises encouraged by the state and located in the western regions.

Several Policies of People's Government of Yunnan Province on Accelerating the Construction of Ruili National Key Development and Opening-up Experimental Zone (YZF[2013] No. 52): Newly-established enterprises in the park, excluding industries restricted or prohibited by the state, are levied the local part of corporate income tax according to the preferential policy of "five-year free and five-year half", that is, they will be exempted from the corporate income tax for first five years, and levied half of the local part of the corporate income tax starting from the first receipt of business income.

In addition, those who meet the policy conditions can also enjoy preferential tax policies such as characteristic towns and cross-border economic cooperation zones.

Policies and Measures to Support the Production and Processing of Special Agricultural Products and the Construction of Cold Chain Logistics (YCN[2020] No.88): In the case that a company in the "green food" industry invested money to build new processing plants of agricultural products or to purchase facilities and equipment in Yunnan Province in 2020, if the actual investment is more than RMB 100 million (including RMB 100 million), a lump-sum bonus will be given at 10% of the actual investment

Market Prediction (Analysis)

The modern fast-paced life increases the number of people who prefer faster and more convenient ways of eating. Dining out and food delivery have been negatively impacted due to the epidemic in 2020, which makes convenience food the fastest way to satisfy appetites for the homebody. Quick-frozen food, instant noodles, self-heating instant hot pot/rice and other convenience foods are embracing hot sales.

As an alternative to traditional meals, convenience food can reduce meal preparation time. Compared with meal alternatives such as takeaways and convenience store light meals, it’s more portable, easier for storage, more cost-effective and more standardized, which can satisfy consumers’ demand for quick, convenient, nutritious and palatable food, thus maintaining steady growth in terms of overall market size.

Data from the "China Convenience Food Industry Report 2020-2026" released by Zhiyan Consulting shows that the scale of the domestic convenience food industry in 2019 is RMB 450 billion, and it is expected to reach RMB 630 billion in 2025. The intensive processing industry of agricultural and sideline product has a great prospect.

Profit Model and Preliminary Benefit Analysis

The main income of the project is the processing and sales of food

Risk Analysis

The production and domestic sewage will be discharged into the sewage pipe network of the park after being treated by the enterprise itself and reaching the Class I Standard. The scientific landscaping will be implemented. Additionally, the production waste will be treated specially during the operation period of the project.

Cooperation Pattern

Sole proprietorship, joint venture and cooperation

Contact Information

Contact entity: Cooperation office of Wanding Economic Development Zone Management Committee, Ruili City

Contact person: Dong Lei

Tel.: 0692-5151380