KUALA LUMPUR: Integrated health supplement company Bioalpha Holdings Bhd has secured about RM2.1 billion contract to supply health food to the public and private sectors in China over five years.
To facilitate this, Bioalpha said its wholly-owned Bioalpha (HK) Ltd had entered into a partnership agreement with two Chinese partners, Guizhou Yuhexin Trading Ltd and Hainan Shifengfu Co Ltd.
Bioalpha HK also entered into a supply contract agreement with Guizhou Yuhexin.
Bioalpha managing director William Hon said the supply contract was valued at 700 million renminbi (RM426.7 million) annually and was expected commence by September this year.
The five-year contract is subject to annual renewal.
Bioalpha would partner with Guizhou Yuhexin and Hainan Shifengfu to supply health food and nutritional meals to private and public sectors in China, Hon added.
"We are very delighted to have been chosen to work with these two experienced and established Chinese partners for the provision of health food in China to both the public and private sectors.
"At RM426.7 million a year for up to five years, this is the single largest contract that Bioalpha has ever secured since our inception.
"It also marks a momentous step in Bioalpha's expansion in China and further reinforces our commitment to strengthen our presence there as we believe there is still a lot of potential to be realised in the country," he said at a virtual press conference today.
Under the arrangement, Bioalpha will be the main contractor and technical advisor to source and supply ingredients for the preparation of the health food and nutritional meals, while Hainan Shifengfu will leverage on Bioalpha's expertise in the formulation of these food products.
Hon said the health food and nutritional meals to Guizhou Yuhexin would be distributed in the province of Guizhou, as well as other provinces moving forward.
Guizhou Yuhexin is principally involved in the trading of food products to the public and private sectors across the Guizhou province.
Hainan Shifengfu is a health food consultant with experience in research and development (R&D) as well as formulation of health and nutritional meals.
Hon said Bioalpha was setting up a subsidiary in Hainan to undertake the project and localise its operations there to better serve its customers and facilitate new orders in China as part of its growth plans.
"Once the subsidiary is established, we plan to apply for tax and trade incentives from the government in China as part of the Hainan Free Trade Port initiative to draw businesses and tourists to the Hainan province.
"This includes a lower tax rate of 15 per cent (compared to the usual 25 per cent) for companies in subsidised industries and tax exemption on imports and production equipment, among others."
He added that this was also part of Bioalpha's mitigation measures following the Covid-19 pandemic, where its exports to China from Malaysia was affected due to lockdown measures.
"By having a physical presence in China, we will be able to react and response faster," he said.