Chinese buy stake in Scales

By Sophie Price -
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Scales Corporation's managing director Andy Borland (left).
Scales Corporation's managing director Andy Borland (left).

A $56 million buy-in to New Zealand's Scales Corporation could signal a significant boost to the Hawke's Bay pipfruit industry.

The corporation is the parent company of Mr Apple - New Zealand's largest vertically integrated grower, packer and exporter of apples.

This week Scales sold 21,500,000 or 15.38 per cent of its ordinary shares to Chinese company China Resources Ng Fung for $2.60 share.

This sale makes China Resources the corporation's largest shareholder.

Scales Corporation's managing director Andy Borland said the new shareholder was a Chinese state-owned enterprise with interests in supermarkets and consumer goods, some of which included apples.

"We're seeing it as a positive endorsement of how our company has been performing," he said.

When asked if this would have any impact on Mr Apple, Mr Borland said he could only see it as a positive for the company.

"We don't see it as selling out to Chinese investors," he said.

"It's a big corner stone, and a credit to the different teams that work at Scales."

Regional councillor and Pipfruit New Zealand board member Peter Beaven said there was quite a significant level of foreign investment in the industry.

"There are certainly precedents for foreign ownership in the apple industry," he said. "I don't know what percentage it would represent in total but it's certainly happened before."

He said once an industry got on its feet and consolidated, as happened with New Zealand's wine industry, it started to look like an attractive investment to foreign purchasers.

Mr Beaven said it was a welcome investment because with the forecasted expansion of the industry, the aim was for $1 billion in earnings from export earnings in 2022.

"We are a structural hungry industry," he said.

"The trees are already in the ground, we need capital for the infrastructure to support that and I am talking [about] cool stores and packhouses.

"And so that sort of ownership is likely to bring capital with it."

He said in addition to this it would also open up access to offshore supply chains as well.

Hastings District councillor and advocate of the city to China, Kevin Watkins, said this sale may well facilitate this product into the Chinese market.

Two weeks ago a Beijing Capital Airlines plane was spotted at Hawke's Bay Airport with a source saying they were here in relation to this deal - a claim denied by Mr Borland.

In 2013 the New York Times labelled China Resources as a "state-owned conglomerate".

"China Resources traces its roots to the days of Mao Zedong's revolution, when it was established in 1938 in Hong Kong to raise money and buy military supplies to support Communist forces," the article reads.

"By 2012 it was China's 18th-largest state-owned industrial company by sales, with revenue of $52 billion.

"Its wide-ranging products include medicine and beer, coal and real estate."

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