Danish Crown Shuts Down China Factory
Danish Crown has closed its Pinghu factory in China due to ongoing profitability challenges, laying off 112 employees and seeking a buyer for the facility as part of its broader strategic restructuring.
Danish Crown, one of the world’s largest pork exporters, has officially closed its meat processing plant in Pinghu, China. The decision comes after a strategic review that determined the facility was not a good fit for the company’s long-term plans.
A Short-Lived Expansion
The factory, located near Shanghai, was opened in 2019 as part of Danish Crown’s efforts to expand its presence in China. However, despite several attempts to improve performance, the plant never reached the expected profitability.
Challenges and the Decision to Close
According to Danish Crown, ongoing struggles made it clear that continuing operations in Pinghu was not a viable option. The company’s Chief Financial Officer, Anders Aakær Jensen, stated that significant efforts were made to turn things around, but the results were not satisfactory. As a result, the company decided to either sell or shut down the plant.
Layoffs and Future Plans
With the closure, 112 employees have been laid off. Danish Crown has already signed a letter of intent with a preferred buyer and is negotiating the sale of the facility. While the deal is still in progress, it is expected to take a few months to finalize.
The company also announced that it would repurpose some of the high-quality equipment from the plant for use elsewhere in its global supply chain. Despite this setback, Danish Crown’s business in China remains strong. In the financial year 2023/24, the company recorded a turnover of DKr 2.8 billion ($390.4 million) from exports to the Chinese market, a level it expects to maintain moving forward.
Broader Strategic Changes
This closure is part of a larger restructuring process at Danish Crown. Last year, the company announced major job cuts in Denmark and decided to discontinue retail-packed fresh meat sales in Germany. These changes are aimed at improving profitability and streamlining operations.
Final Thoughts
While the closure of the Pinghu facility marks the end of Danish Crown’s local production in China, it does not signal a complete withdrawal from the market. The company remains a significant player in the Chinese pork industry through its exports. The outcome of the plant’s sale will be closely watched as Danish Crown continues its strategic transformation.
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