Tea manufacturer Longrun Tea Group Co Ltd is expanding its footprint by setting up more stores and through a series of mergers and acquisitions.
　　Longrun also said it plans to acquire companies in tea producing provinces like Fujian, Zhejiang, Hunan and Yunnan. The company has already commenced its M&A activities after disclosing that it intends to acquire a Fujian-based tea manufacturer in September for an undisclosed amount. Longrun said it intends to be the brand management company for over 70,000 Chinese tea enterprises. It added that it would permit tea manufacturers to maintain their previous brand names and products even after acquisition, and its involvement would be mainly in accelerating business development.
　　In May, the Hong Kong-listed Long Far Pharmaceutical Holdings Ltd offered HK$160 million to acquire Longrun Tea Wealth Creation Co Ltd and renamed it Longrun Tea Group Co Ltd, marking Long Far's shift from pharmaceuticals to tea.
　　Longrun Tea Group Co Ltd has an annual production capacity of over 10,000 tons of tea, and its sales touched 110 million yuan in 2008 with about 35 million Yuan after-tax profits. Cooperation with Rocket Capital has helped the company raise funds to the tune of HK$53 million. "We will use HK$37 million for development of the tea-related business and split it into three components. These include for establishing direct sales stores, developing marketing networks and enhancing product R&D. The balance of HK$16 million will be used to fund daily operations," said Jasper Jiao, chairman, LongRun. Kenneth Huang, the controlling shareholder of Rocket Capital, said he remains optimistic on the success of LongRun's tea business and said it would help the company become one of the top firms in China in the next five years.