SMTrack expands footprint in China with JV deal
By Goh Thean Eu August 19, 2014
- Agreement was inked 3mths after deal with IDG & Canton Fair Import Export Co Ltd
- Provides a platform to further commercialise its traceability solution internationally
SMTRACK Bhd (formerly known as Smartag Solutions Bhd), has strengthened its presence in China, inking a joint-venture (JV) agreement with Chongqing Zhenxin Investment Ltd Co (CZI).
The JV deal, which is to conduct information technology and related applications to facilitate trade within the Chongqing free trade zones in China, was signed by both parties yesterday (Aug 18).
The agreement comes roughly three months after SMTrack signed a deal with Institute of Digital Guangdong and Canton Fair Import Export Co Ltd to develop Malaysia’s first “cross-border end-to-end food traceability” system capable of delivering from “farm to fork” to Southern China.
As part of the JV deal, both SMTrack and CZI will set up a JV foreign investment company within the Chongqing free trade zones.
SMTrack will have a 55% stake in the company while CZI will have a 45% stake in it. However, the total share capital to be issued for the new entity has not been determined at this juncture.
“The actual quantum will be decided mutually between CZI and SMTrack in due course prior to the set up of the joint venture company. A separate announcement will be made in due course upon the finalization of the actual investment amount,” said SMTrack in its filing to Bursa Malaysia on Aug 18.
While both companies are still finalizing the investment amount, the roles of respective parties have been determined.
SMTrack will be responsible for developing an e-commerce portal with traceability core functions. It is also to complete a client platform software and install servers to enable users to trace products around the world.
Other roles include sourcing for food items and related products to enter the China market to such extent that it is able to value add in terms of food safety and arrange for recall features using its global traceability system; and to achieve international food traceability requirements via its Electronic Product Code Information Services software.
As for CZI, it will be responsible for obtaining Chinese Chongqing and Sichuan information technology projects, as well as identifying opportunities for food traceability and e-commerce activities.
It will also coordinate domestic distribution channels and showrooms for items brought in for e-commerce trading; to apply for required licenses, conduct promotional activities in addition to promotinging and recruit merchants and sales staff to take part in the e-commerce portal.
According to SMTrack, the deal provides a good platform for the company to further commercialise its traceability solution on an international level as the market potential is huge.
Citing data from Chongqing Municipal Government, the company noted that Chongqing is the largest municipality located in southwest China with a population of 30 million.
In the first half of 2014, Chongqing foreign trade reached ￥268 billion (US$$43.61 billion), and increase of 41.8% year-on-year, with export trade reaching ￥167 billion (US$$27.19 billion), while import trade recoded ￥101 billion (US$$16.44 billion).