Aiming to become noodle king.

The company that brought the world the cup noodle, Nissin Food Products, is forging an alliance with China's number two in the instant noodle market, Hebei Hualong. The Japanese food giant is aiming to develop a substantial slice of the vast Chinese market by effectively taking Hebei Hualong under its umbrella.

Nissin is to take a 33.4% stake in Hebei Hualong for about US$1.8 billion, making the deal the largest by a Japanese food manufacturer in China and a significant step in its bid to enhance its global presence.

Nissin has been producing and marketing instant noodles in China since 1993, but to date has lagged competitors such as Sanyo Foods and Toyo Suisan Kaisha in the Chinese market, despite controlling up to 40% of its domestic sector in Japan.

For its part, Sanyo has teamed up with Tingyi (Cayman Islands) Holdings Corp, the largest Chinese packaged-noodle producer, to produce and sell noodles on the mainland, Sanyo taking a 30% stake in Tingyi.

Last year Nissin pulled out of a business alliance with a Taiwan firm with large noodle production operations on the Chinese mainland.

The new partner, Hebei Hualong, hopes its alliance will strengthen its lineup of higher-priced products to compete with Tingyi, which currently controls 40% of the market compared to its own 20%.

Hualong is planning to build five factories in this financial year and raise capacity by 30%, while Nissin expects the partnership to be a platform for sales throughout the Chinese mainland.

The partners are looking to become the combined giant in the China market by 2007, while also developing other Asian markets.

from Kiriko Honda, Tokyo Office