KANSAS CITY, MISSOURI, US – Wudeli Flour Group, the world’s largest wheat flour enterprise, on Sept. 19 launched production at its single largest plant. With capacity to grind 6,000 tonnes of wheat per day, the newly commissioned mill at Zhamadian City, Suiping County, in southern Henan Province has raised the daily production capacity of the group’s 18 wholly owned subsidiary companies to 61,000 tonnes (wheat equivalent), reinforcing Wudeli’s dominant position in the global rankings.

According to a press release, the greenfield site will be able to process 1.65 million tonnes of wheat per year with a value of 4.3 billion yuan ($688 million).

The massive, five-story plant houses 347 roller stands supplied by Uzwil, Switzerland-based Buhler Group. Historically, Wudeli has depended on Buhler for about 80% of the equipment in its mills.

Though the basic mill layout is similar to other mega-plants that the company has built in recent years, the sheer number of machines installed at the Suiping plant presented special design challenges.

Thanks to the latest automated management software, only a handful of operators per shift are required to run the plant. Total Suiping mill staff is 250. Electricity usage is 56kwh per tonne.

The mill contains concrete silo storage for up to 150,000 tonnes of wheat, which is mainly procured from the surrounding region. Like almost all other Wudeli subsidiaries, the mill is situated in the north China plain, where most of this year’s record 136-million-tonne wheat crop  was   harvested.

Wudeli, which is headquartered in southern Hebei Province, now has four milling subsidiaries with 18,000 tonnes daily capacity in Henan, which is the Middle Kingdom’s number one province for the cereal, accounting for around one-third of the national crop.

Private traders deliver wheat to the mill in 34-tonne bulk trucks. Wudeli Group depends on online auctions of national, provincial, county and local reserves as well as Sinograin sales for 10% to 20% of total wheat supply. Such government auctions are market interventions intended to stabilize wheat prices.

At the group level, Wudeli imported over 1 million tonnes of wheat in 2020 but expects the volume to decrease to 200,000 tonnes for 2021, according to a company spokesman. The Suiping factory is located close to the Yangtze River, making it well-positioned to receive imported wheat. During the last two years, China’s annual wheat imports have doubled to 10 million tonnes while feed use of wheat has increased from 19 million tonnes in 2019 to 40 million tonnes in 2020, per USDA data. High international corn prices drove the change.

With each new mill, Wudeli has increased the level of automation and mechanized handling. All palletization of sacks of flour is now done by robots, including some movement of pallets in the warehouse and loading onto trucks. Such technology was introduced at the 3,000-tonne-per-day greenfield mill opened in late 2019 in Handan City in southern Hebei Province.

As one of the southernmost of Wudeli’s operations, the Suiping mill is meant to target burgeoning urban demand for wheat-based foods in the provinces south of the Yangtze River, where rice is the main crop and traditional staple food. Unlike its main competitors which have built many of their mills near China’s largest cities, Wudeli’s strategy from the outset has been to locate its ever-larger plants in the wheat production zone and count on the country’s rapidly developing transportation infrastructure for movement of a wide range of flour types to urban consumers.

Orders from a national network of over 3,000 distributors are handled through one central sales office at the company’s headquarters. Dispatch of flour is mainly in trucks but also by river transport and rail.

According to a company spokesperson, the main impact of the COVID-19 pandemic on Wudeli flour sales has been a continuing boom in demand for small packaging as households prepare more wheat-based foods at home.

As recently as late 2018, when Wudeli’s daily production capacity was already a world-leading 40,000 tonnes, the management of the family-held company declared a target to reach 80,000 tonnes of daily capacity within the next five years, enough to meet one-third of all Chinese flour consumption demand.

 The disruptions of the pandemic haven’t significantly flattened Wudeli’s growth curve. Prior to inauguration of the Suiping mill, Wudeli opened a 4,000-tonne-per-day mill in Shanxi Province. In November, a 3,000-tonne capacity addition was completed at an existing mill to bring the group total to 64,000 tonnes per day. Currently under construction is another 4,000-tonne-per-day mill in Linyi, Shandong Province.

The company is also constructing a new headquarters building in Handan City on China’s main north-south high speed train line. Once construction is complete, many staff will relocate from much smaller Daming City, where the company started its first mill around 30 years ago. The company said the new location will make easier the hiring of highly qualified employees thanks to better transportation links.

Top managers ascribe their company’s success to a single-minded focus on producing the highest quality flour at a competitive cost by adhering to stringent standards and building larger, more efficient mills with the best technology available. 

An article about Wudeli on Bühler’s website mentions that “according to the relevant state provisions, tolerance for insects, mildew, sprouts, and other impurities in the wheat should not exceed 6%. Wudeli has set a much higher standard and rejects all wheat that contains more than 1 % foreign matter.” 

Beyond the standard price for quality business formula, early in his company’s history, the founder, Dan Hong, elaborated a management philosophy that defined five stakeholder groups who all must benefit to guarantee the company’s success. First, farmers must sell wheat at profitable prices and be paid cash on delivery. Next, employees should enjoy job security, good wages, generous benefits and a comfortable work environment while having opportunities for training and promotion. Customer loyalty is obtained by reliable quality and supply and advantageous prices made possible by low per-tonne production costs. The state benefits from collecting reasonable taxes on the healthy profits of each subsidiary at a local level.

Based on such a solid relationship with the four key stakeholder groups, the enterprise, as the fifth stakeholder, itself will in the natural course of things prosper and expand, Wudeli’s founder prophetically believed.