This is an English adaptation of a FoodBud historical article originally published on February 17, 2022.
FoodBud previously covered packaging suppliers tied to restaurant groups, including Nanwang Technology, which serves brands such as Wallace and KFC, and Hongyu Packaging, which is backed by Angel Yeast. This article looks at Jiaolian Technology, a packaging and consumer-products supplier that began with overseas supermarket, foodservice, and food-sector customers before accelerating its domestic business.
Jiaolian Technology listed in 2021 with a market value of RMB 4.9 billion at IPO. By the time of the original article in February 2022, its market value had fallen to RMB 3.5 billion.
Jiaolian Technology develops, manufactures, and sells plastic products and fully biodegradable products. Its product range includes foodservice disposables and durable household goods used in home, FMCG, foodservice, aviation, and related sectors.
Its foodservice products include cutlery, cups, bowls, plates, straws, and airline meal kits. Its household products include storage boxes, shoe boxes, chair panels, filter baskets, bathroom racks, and fully biodegradable film bags.
The company’s customer base includes Amazon, IKEA, Walmart, KFC, Starbucks, Sam’s Club, Pizza Hut, Costco, Woolworths, Sysco, US Foods, Safeway, Target, Loblaws, Tesco, Hema Fresh, Little Sheep, Yoshinoya, Mixue Bingcheng, RT-Mart, Metro, and Auchan.
Before 2012, Jiaolian Technology focused on overseas markets. It expanded its product lines across injection-molded items such as cutlery, thermoformed items such as cups, bowls, and plates, and straws. During this period it formed relationships with Tesco, ASDA, Jarden, Walmart, Target, Safeway, US Foods, and Costco.
From 2012 to 2015, the company began testing the domestic market while continuing to expand overseas. It worked on PLA material modification and participated with institutions including East China University of Science and Technology in research projects under China’s 12th Five-Year national science and technology support program, including work on non-grain starch-based bioplastics. During this phase it added customers such as Woolworths, Morrisons, Dollar Tree, Walgreens, Amazon, RT-Mart, and Auchan.
From 2016 onward, Jiaolian Technology continued developing biodegradable materials and entered the domestic and overseas home-goods market through cooperation with IKEA. It also focused on chain restaurant and home-goods customers, adding Sam’s Club, KFC, Pizza Hut, Starbucks, Mixue Bingcheng, and Hema Fresh.
The company also built out its Xiepu production base, applying what it described as German standardized-factory concepts in layout, equipment, automation, efficiency, and standardization. The site includes automated injection-molding and thermoforming workshops, digital workshops, and a digital workshop for fully biodegradable materials.
According to the prospectus, export sales accounted for more than 80% of revenue from 2018 to 2020. Domestic sales rose steadily, increasing from 7.11% of revenue in 2018 to 29.43% in the first half of 2021.
Jiaolian Technology reported revenue of RMB 948 million in 2018, RMB 1.02 billion in 2019, and RMB 1.026 billion in 2020. Net profit was RMB 10.546 million, RMB 74.84 million, and RMB 114 million, respectively. Net profit excluding non-recurring items was RMB 21.6868 million, RMB 66.85 million, and RMB 89.186 million.
From 2017 through the first half of 2021, plastic products accounted for more than 90% of product sales, making them the company’s main product category.
The biodegradable materials business was smaller but growing quickly. Fully biodegradable material products accounted for 0.75% of sales in 2017, 2.42% in 2018, 3.55% in 2019, 4.60% in 2020, and 7.29% in the first half of 2021.
From 2018 through the first half of 2021, the proportion of products sold to major customers that flowed into foodservice was 50.69%, 50.66%, 54.76%, and 55.27%, respectively. The company said foodservice customers generally used customized foodservice products for dine-in or delivery operations rather than for private-label resale, so this was not traditional OEM private-label production.
Among its top customers were restaurant chains including Mixue Bingcheng and Pizza Hut. Sales to major top-10 customers including Mixue Bingcheng and Pizza Hut accounted for 71.04%, 74.15%, 75.56%, and 72.61% of operating revenue from 2018 through the first half of 2021.
In the first half of 2021, Mixue Bingcheng became Jiaolian Technology’s fourth-largest customer, purchasing RMB 50.4937 million, equal to 8.72% of total revenue. Across the reporting period, sales to the top five customers accounted for 50.29%, 49.12%, 46.68%, and 50.37% of revenue.
Before the IPO, Jiaolian Technology’s actual controllers were Wang Xiong and Lin Huiqin, a married couple who directly and indirectly held 55.118 million shares, equal to 61.24% of pre-IPO share capital.
Wang Xiong, born in June 1966, holds a junior-college degree and was responsible for company strategy and overall operations. He worked as a teacher at Linhai Baishuiyang Shuanglou Middle School from August 1988 to August 1995, at Linhai Baishuiyang Middle School from September 1995 to August 1997, and as director of Linhai Baishuiyang Craft Wood Products Factory from September 1997 to February 2004. From March 2004 to July 2009 he served as chairman of Ningbo Jiaolian Plastic Products Manufacturing Co., Ltd. Since August 2009 he has served as executive director/chairman and general manager of Jiaolian Technology.
Before the IPO, Wang directly and indirectly held 49.1185 million shares through Zhenhai Jinsu and Zhenhai Jinmo, equal to 54.58% of pre-IPO share capital.
Lin Huiqin, born in May 1966, holds a junior-college degree. She worked at the Linhai State Tax Bureau from August 1989 to May 2005, then at Ningbo Jiaolian Plastic Products Manufacturing Co., Ltd. from June 2005 to July 2009. Since August 2009 she has served as Jiaolian Technology’s administrative director.
Before the IPO, Lin directly and indirectly held 5.9995 million shares through Zhenhai Jinsu and Zhenhai Jinmo, equal to 6.67% of pre-IPO share capital. Other pre-IPO shareholders included Zhang Sanyun at 22.5%, Zhenhai Jinsu at 10%, and Zhao Jianguang at 7.5%.
After the IPO, Wang Xiong held 38.16%, Zhang Sanyun held 16.88%, Zhenhai Jinsu held 7.5%, Zhao Jianguang held 5.63%, Zhenhai Jinmo held 3%, Cai Liyong held 2.63%, and Lin Huiqin held 1.22%.
The company planned to raise RMB 466 million through the IPO, mainly to expand capacity and supplement working capital.
For supply-chain companies of this type, payment terms for domestic customers were around 30 days, while overseas customers typically had 60- to 90-day payment terms, creating a clear working-capital burden. In the first half of 2021, Mixue Bingcheng was Jiaolian Technology’s largest accounts-receivable customer, with receivables of RMB 15.6223 million.
Jiaolian Technology’s accounts receivable balances were RMB 120 million in 2018, RMB 130 million in 2019, RMB 160 million in 2020, and RMB 140 million in the first half of 2021. These represented 13.07%, 13.12%, 15.79%, and 23.91% of operating revenue, respectively. The company attributed the increase to factors including business expansion.
Note: IPO, market-capitalization, fundraising, ownership, and forward-looking use-of-proceeds figures are historical as of the 2022 source article.