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A giant of Asia's eel industry: Song Cheng Enterprise Co., Ltd.

Supplying roasted eel delicacies to markets in Taiwan, Japan and further afield is the primary business of Song Cheng Enterprise Co., Ltd. Headed up by Chairman Lin Tung-Kuo, the 19-year-old frozen prepared food outfit has perfected the art of culturing the snake-like fish especially enjoyed by Asian gourmets. It's also developed a respectable trade in pork steaks and supplying health foods derived from eel byproducts such as oil and bone.

Among the Neipoo, Pingtung-headquartered company's list of blue chip clients is the 7-Eleven chain of convenience stores in Japan, where eel is typically served as a dish with locally-grown sticky rice. In Taiwan the diversified customer base includes a host of fast food operators, who serve the product to order just five to 10 minutes after removing it from the freezer.

Boasting paid-up capital of NT$ 190 million (US$ 7.3 million), Song Cheng harvested some 2,500 tons of eel from 15 domestic ponds in 1992. The yield is likely to be about the same this year. Meanwhile, production from its Malaysian farms topped 1,500 tons in 1992. This year's output there is expected to double to 3,000 tons.

Interestingly, the company's initial plans for investing in Malaysia five years ago called for establishing shrimp farms. No newcomer to the business, it had been involved in raising grass shrimp in Taiwan since 1981. Indeed, sales of the popular shellfish during 1987 reached $20 million, compared to $25 million for eel. But that marked the zenith of what is now remembered as the "Golden Age" of shrimp raising in Taiwan.

"In 1988 production dropped to just one-third of the previous year's level, so we thought it would be wise to invest in Malaysia," explained Lin Tung-Rong, president. "But with world prices trending downward, the decision was made not to grow shrimp but instead to raise the more stable, luxury-priced eel."

Song Cheng has not looked back since it seeded the first eel crop with elvers in April of 1990. That was the culmination of almost two years of hard work involved in clearing thick jungle vegetation to make room for a 5,000 acre mega-farm in the eastern state of Pahang that stretches a coast line length of almost 22 kilometers. The site, which is being leased from the Malaysian government for a period of 90 years, is the world's largest farm-factory complex of its kind. Tilapia is also produced there (approximately 6,000 metric tons were harvested last year).

More than 2,000 people are employed by Song Cheng in Malaysia, compared to 317 in Taiwan. The lower costs of labor and land make for a winning combination, as sales this year are expected to equal the investment made thus far to develop the vast Pahang operation.

Planning to further diversify its supply base, the company hopes to soon build a factory about 100 kilometers outside of Shanghai on mainland China. Labor costs there are even lower than in Malaysia, and land is relatively cheap.

"We agreed in April to make a major investment, although we are still negotiating the particulars," said Mr. Lin. "There is a big potential market there thanks to the increase in living standards. So we want to make sure that a certain percentage of our production will be allocated for domestic sales."

Meanwhile, buyers of frozen eel products can expect to pay more in the near-term due to the recent price rise in seed to about $7 per kilo. This has brought the cost of production up to $10 a kilo. It seems that the supply of preferred elvers has fallen due to the effects of a natural cycle, explained Mr. Lin. But there is another important factor to consider -- namely the rise of mainland China as a buying force. Demand for frozen eel continues to advance. Some 10,000 metric tons were consumed last year.

So it is no wonder that the Song Cheng banner will soon be flying on mainland China, where the steady winds of change bode well for the gentle art and rewarding enterprise of eel farming.
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Title Annotation:Frozen Foods of Taiwan: 1993
Author:Saulnier, John M.
Publication:Quick Frozen Foods International
Article Type:Company Profile
Date:Jul 1, 1993
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