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AUSTRALIAN medicinal cannabis company, Creso Pharma (ASX: CPH) has entered the lucrative Chinese food market after it signed a deal with a local hemp producer.
Creso Pharma has entered a strategic partnership with Zhejiang Kingdom Creative Co, a subsidiary of Hong Kong-listed company, Kingdom Group, to distribute Creso's products.
The agreement provides Creso with a strategic foothold in China, where the health food market is estimated to be worth $40 billion, and allows Kingdom Creative to expand its product offering into the healthcare sector and medical cannabis products.
Currently Kingdom Creative is primarily a hemp and flax-based production company.
Creso Pharma CEO and Co-founder, Dr Miri Halperin Wernli, says the group's agreement with Kingdom represents an important strategic moment.
"This is a very exciting partnership for Creso as it gives us a strategic foothold in China and Asia," says Wernli.
"Our collaboration with Kingdom Creative offers a great opportunity to work with a well-established and substantial organisation in this market."
Creso's break into the Chinese market follows the company's global expansion plans over the course of 2017.
In July, Creso broke into the North American market with the acquisition of Canadian cannbis production company Mernova Medicinal in exchange for $10.2 million worth of cash and equity.
The group also made its expansion into Europe after signing an exclusive commercialisation agreement with Virbac Switzerland to distribute hemp-based animal feed products.
Creso's move into the Chinese market should prove lucrative, considering the Chinese health food market is projected to grow by 10 per cent every year to 2025.
Following the agreement with Kingdom Group, Creso will open four new offices in China in Beijing, Shanghai, Shenzhen, and Guangzhou, giving it a sales and marketing presence and local distribution network for its products.
Kingdom Creative, as part of the agreement, will also build a health food, nutraceuticals, body care and cosmetic company.
The company says it is in discussions with other Asian pharmaceutical and cosmetics groups to bring Creso's products and IP to Asia to reach a massive population of consumers and patients.
At around 10.45am (AEDT) Creso Pharma shares were up 15.15 per cent to $1.14 per share.
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