Zhongpin's 2011 Proxy Statement and Chairman's Annual Letter are Available Online

The Chairman's letter to shareholders is available in the 2010 annual report to shareholders. Zhongpin is following the U.S. Securities and Exchange Commission's rules for "notice and access" of annual meeting related materials, and making its 2011 proxy statement and 2010 annual report to shareholders available to shareholders at a specific website for electronic voting, the address of which is being mailed to shareholders of record as of the close of business on April 20, 2011.

Zhongpin's annual meeting of stockholders will be held at its representative office located at Room 605A, Tower A, Raycom Info Tech Park, No. 2 Kexueyuan South Road, Haidian District, Beijing, People's Republic of China 100190, on June 15, 2011, beginning at 10:00 a.m. local time.

Complete text of Chairman's letter to shareholders

April 20, 2011

Letter to Shareholders

from Mr. Xianfu Zhu,

Chairman, President, and Chief Executive Officer of Zhongpin Inc.

Dear fellow shareholders:

In fiscal 2010, we marked the third anniversary of our NASDAQ listing by presiding over the opening bell ceremony in New York's Times Square. In addition to this symbolic milestone, we made substantial progress in an ongoing program of business expansion that is fundamental to our strategy of becoming a dominant national brand in pork and pork products. Our double-digit growth in revenues, net income, and earnings per share in 2010 reflected the impact of added capacity as well as a rebalancing of our product lines to reflect the increasingly diversified demands of Chinese consumers.

The Business Model

In 2010, Zhongpin ranked fourth in the world's largest single market for pork and pork products. In 2010, according to the US Department of Agriculture, China accounted for 49% of global production and consumption of pork, which in value terms is the second largest sector in China's retail food market. Expanding from our original base in Henan Province, in central china, where the Zhongpin brand is entrenched through our network of branded stores, showcase stores and supermarket counters, we have extended our integrated business model geographically to include key regions beyond Henan. We now have meat processing facilities in north China, east China, northeast China and southwest China.

Currently in north and east China, we are building industrial clusters based on the Henan model, bringing advanced processing facilities close to major markets together with our retail approach based on branded points of sale. As part of this expansion, which will see a 35% increase in processing capacity for chilled and frozen pork and a 78% increase in capacity for prepared pork products in 2011, we are gradually tilting our product mix towards more high value-added products. In 2010, we began to set up an upstream dimension through a joint venture with a nationally recognized hog sire breeder in Henan, which will come on line in August 2011 and provide 20,000 head of premium sire boars annually for our hog suppliers. We added a new downstream product with our business in pork oil, with the opening of a production facility at our headquarters in Changge, Henan. We are also developing a cold-chain logistics service that will leverage our national network of cold storage and transport facilities.

Building industrial clusters and rebalancing the product mix

As we expand, we are keenly aware of the need to develop our integrated business model to anticipate and lead the development of a modern meatpacking and processing industry. This means deploying state-of-the-art processing equipment as well as information technology based logistics in order to improve our operational efficiency.  In several of our recent expansion projects, we developed these functions in strategic proximity in order to maximize opportunities for synthesis and operational innovations.

Typical of this strategy are the facilities under construction this year. In Changge, we are investing $58.5 million to build a new production, research and development, and training complex. On the production side, we will be adding 100,000 metric tons of annual capacity for prepared pork production. The R&D facility, which we expect to open by the fourth quarter of 2012, is expected to strengthen our advantageous status of national-level pork processing R&D center and quality control center. In Changchun, we are investing $61.5 million to build a slaughtering and processing plant, low temperature prepared pork plant, logistics center, and R&D center. Here, we will add a total of 125,000 tons of annual capacity – 70,000 tons of chilled pork, 25,000 tons of frozen pork, and 30,000 tons of prepared pork products. At the same time we have another high-standard facility under construction, located in Jiangyan, Jiangsu Province.

By the end of 2012, such activities will bring total capacity of chilled and frozen pork to 758,760 metric tons annually, from 563,760 metric tons at the end of 2010. Annual capacity for high-value added prepared pork products will rise to 306,000 metric tons, nearly double our current capacity of 110,000 metric tons, bringing the share of prepared pork products from 15.6% of total production to around 28%. This reflects our strategy of bringing our product mix into line with rising consumer demand for prepared pork products, as well as willingness to pay higher prices for them. We currently offer more than 150 prepared meats under the Zhongpin brand, ranging from sausages and hams to Chinese cured ham, out of a total product line of more than 390 distinct meat products and 35 fruit and vegetable products. As of the end of 2010, we had more than 100 new products under development.

Investing in technological innovation to be competitive in a changing market

There are many reasons for investing in technological superiority. Broadly speaking, the most important of these is food safety, followed closely by our view on coming changes to the pork industry as the Chinese government moves to modernize the meat industry.

A reputation for using healthy, natural products is integral to our brand. Traditional wet markets still dominate the national pork market, leading to lapses all across the supply chain in terms of health and safety. Cold chain logistics are replacing the wet market system dependent on a myriad of small farms and brokers. We believe that changes in the industry will accelerate over the next five years because Chinese consumers increasingly demand an end to the misery of tainted food.

In March 2011, our industry faced concerns when a major pork manufacturer, Henan Shuanghui Investment and Development Company, discovered that some of its hogs had been fed clenbuterol.

Our quality assurance system ensures that only healthy hogs are slaughtered at our slaughterhouses. We believe that the scandal has actually benefited Zhongpin, not only because of our existing reputation for quality assurance but because it has focused our attention on doing a good job even better. It has given a new impetus to our existing program of developing better upstream controls.

In terms of upstream management, we intend to increase the proportion of hogs that we buy from large-scale breeding farms, currently 30%, and strengthen supervision of brokers, from whom we buy the remaining 70%. We have increased our inspection sampling for hogs from the 5% mandated by the government to 10%. We are also taking steps to control the upstream industry, including our joint venture sire breeder farm, which is scheduled to begin operation in August 2011. We are applying a "six party" model to our upstream ventures, through which we integrate breeder hog farms, breeding farms, feed plants, veterinary medicine and vaccine companies, and banks, together with the resources of the Zhongpin Group.

On the policy side, in 2010 the China Meat Association, or CMA, published a strategy report corresponding to China's 12^th Five-Year Plan (2011-2015). This called for a decrease in sales of room temperature sales of pork to below 50% in cities at or above the county level by 2015, and an increase sales of chilled pork from 10% to 30% of pork sales across the country. Of even greater impact may be a plan to reduce outstanding slaughterhouse licenses from 21,000 to around 3,000.

If enforced, the new policies will give an enormous advantage to market participants who have the quality controls, processing technology, and cold-chain logistics supported by information technology to meet the new standards. At present, the top five pork manufacturers have a market share of less than 10%. Over the next five years, the modern sector of the meat industry is likely to grow quickly as the fragmented "wet" supply chain is replaced by regional and national companies managing "dry" supply chains characterized by cold storage, delivery systems with electronic inventory and traffic controls, and "dry" end users such as supermarkets. At Zhongpin, we see these trends as extremely supportive of our own business objectives, which include serving as an industry consolidator as the traditional system is replaced in large part by a modern system reflecting the information age.

Expanding our footprint

In order to take advantage of these opportunities, we have expanded our marketing and distribution capability along with production capacity. By the end of 2010, we had sales offices in 127 cities in China and warehouses in 92 of those. We will be expanding our network of sales offices and warehouses into up to 10 additional cities by the end of 2011, targeting cities with between 1-3 million residents and annual per capita income of over RMB 10,000. We have been building our network of showcase stores, branded stores, and Zhongpin supermarket counters. We increased the number of these modestly in 2010, to a total of 3,326 outlets, an increase of 121 stores, with the largest geographic sector growth in third-tier cities, up 10% to 421 outlets. This compares to an increase of 144 stores in 2009. By the end of the year, we had 157 showcase stores, 1,072 network stores, and 2,097 supermarket counters. Zhongpin has established distribution networks in 20 provinces, plus Beijing, Shanghai, Tianjin, and Chongqing, covering parts of the north, east, south, and mid-south regions of China, and has also formed strategic alliances with leading domestic supermarket chains within China.

In addition to the new projects we have highlighted as part of our strategy of developing industrial clusters, we completed several major capacity expansion projects in 2010. These included our new facility in Tianjin, which went into operation in January 2010 with an annual production capacity of 100,000 metric tons of chilled and frozen pork. Phase two of the Tianjin facility began construction in October 2010, with a planned capacity of 36,000 metric tons of prepared pork products. Our new pork oil plant in Changge, with a capacity of 20,000 metric tons, began operation in April 2010. We completed an expansion of our facility in Anyang City in Henan Province in August 2010 as planned, increasing capacity from 63,000 metric tons to 85,000 metric tons. In October 2010, we also broke ground for a $63 million combined production facility, warehouse, and distribution center in Taizhou, Jiangsu Province, that will have a production capacity of about 100,000 metric tons of chilled and frozen pork, and 30,000 tons of prepared pork products. Of the chilled and frozen output, 80% will be for chilled pork including easy-to-cook products, and 20% for frozen pork.

Managing our financial resources wisely

At this critical juncture, the Chinese economy is maintaining a robust growth trajectory and national policy supports consolidation of the industry. The only way forward is growth, to avoid the pressures that will inevitably fall upon smaller, weaker players. At the same time, we have exercised a conservative fiscal strategy, based on paying off debt and leveraging our equity. We believe that our existing cash and cash equivalents, together with our ability to secure bank borrowings, will be sufficient to finance our investment in the operating requirements of these new facilities. For all of 2011, we anticipate capital expenditures of about $142.8 million. As of December 31, 2010, our debt to total capital was 36%, and our net debt to total capital was 25%. Interest coverage for the year was 8.9 times. We believe that moderate de-leverage and our good interest coverage gives us reasonable financial flexibility should we need it.

Part of the reason for our healthy cash position is a follow-on public offering of 5 million shares of common stock, completed on March 22，2011. Our aggregate net proceeds were $66.4 million after deducting underwriting discounts and commissions as well as offering expenses paid by Zhongpin. Out of the proceeds, some 60% will be used to support expansion projects while the remaining 40% has been allocated to general corporate use. Although this has led to some dilution for existing shareholders, the overall impact has been to strengthen our fiscal position as we undertake our current expansion program.

One final piece of good news on the financial front is continuing national support for our capacity expansion, which is viewed as part of a national priority to modernize the meat industry. In 2010, we received government subsidies of $4.2 million, an increase of $0.8 million over 2009. In 2011, we anticipate subsidies of at least $5 million.

2010 Operating Highlights

China overtook Japan to become the world's second largest economy after the United States in 2010, with a nominal GDP of $5.88 trillion. Its 10.46% growth rate, the highest of any major economy, triggered risks of overheating, and China's central bank raised interest rates twice during the year. Macroeconomic cooling measures have helped to reduce inflationary pressures to some degree, and policymakers view 9.8% as a reasonable growth forecast for 2011.

Although concerns have been raised at the national level with rising food prices, we believe that the cause of higher pork prices during the year was largely due to a combination of government subsidies for hog farmers in the first half of 2010, as well as drought and floods in several parts of China that increased agricultural prices and increased the cost of raising hogs. The result was a sustained increase in hog prices that lasted several months and contrasted with the normal pattern of short periods of price change followed by periods of stability.

During these months, market prices for pork were unable to match the sustained increase in hog prices, and as a result Zhongpin's third quarter profit margin was lower than in the third quarter of 2009. By November, the spread between hog prices and pork prices returned to a more normal level. Although hog prices continued to rise through the end of the year, pork prices rose still more rapidly than hog prices and we were able to achieve more normal profit margins in the fourth quarter and for the year as a whole. Gross profit margin declined slightly, from 11.9% in 2009 to 11.7% in 2010. The outlook for pork and pork products in 2011 remains strong, buoyed by consumer demand. In 2011, live hog prices are expected to increase in the first half despite ample supply. Average pork prices are expected to increase between 5-10% during the year.

Against this backdrop of economic growth and higher commodity prices, Zhongpin's strong performance exceeded our guidance and expectations for 2010 with an increase in revenues by 30% to $946 million, and an increase in net income by 28% to $58.3 million. This compares with 2009, when revenue grew by 35% and net income increased by 32%. Basic earnings per share increased by 13% to $1.65 on a fully diluted basis, compared with $1.33 in 2009.

We made significant progress during the year executing a growth strategy based on increasing our brand recognition and sales; expanding our market presence; increasing our production capacity; expanding and optimizing our product lines; and maintaining our technological superiority.

Geographic expansion was among the major themes during the year, with nine facilities put into service in Changge, Zhumadian, Anyang, Yongcheng, and Luoyang, all in Henan province, and a new 100,000 metric ton production facility in Tianjin, the gateway to the Bohai Gulf Region. Another four facilities will begin operation in 2011, and three in 2012, in locations ranging from Taizhou in Jiangsu Province to Changchun in Jilin Province. Going forward, $145.5 million in new construction is planned or underway. During the year, Zhongpin added 89,000 metric tons in new capacity, bringing the total to 703,760 metric tons.

The impact of higher prices was felt mainly in our segments for chilled pork and frozen pork, accounting for 54% of sales and 27% of sales respectively. Both segments reported growth in revenue and tonnage, with revenue from chilled pork products increasing by 30% from 2009 to $514.6 million and tonnage increasing by 24% to 265,315 metric tons. The average price per metric ton of chilled pork increased by 5% from 2009. Frozen pork revenues increased on higher tonnage at slightly higher average prices. Revenues from frozen pork products increased by 15% in 2010 to $258.5 million. Frozen pork tonnage increased by 15% in 2010 to 152,766 metric tons. The average price per metric ton for frozen pork increased 0.1% in 2010 from 2009. Revenue from chilled pork was $514.6 million and revenue from frozen pork was $258.5 million. The performance of these two segments was quite different from 2009, when average prices for fresh and chilled pork fell by 18% and average prices for frozen pork declined by 23%.

Our strongest relative performance was in prepared pork products, a segment representing only 17% of sales but one that is growing quickly. We saw sales growth of 69% in 2010 to $157.4 million, up from $93 million in 2009, and volume growth of 86%, based on a 9% decrease in average prices in 2010 from 2009. Based on projects currently underway, this segment will continue to see double-digit growth in 2011.

Our fruit and vegetable segment also performed well. Revenues for the segment increased on higher tonnage at higher average prices. Vegetable and fruit revenues increased by 34% in 2010 to $16.2 million. Tonnage of vegetables and fruit increased 22% in 2010 to 20,497 metric tons. Revenues in the segment contributed 2% to total sales in 2010.

Balance sheet and cash flow

Through conservative management, we were able to end up with significant improvements in our balance sheet despite an aggressive program of capital expansion. We ended the year with cash and cash equivalents of $84.1 million, $83.6 million in long-term debt and working capital of $34.7 million (current assets of $211.3 million less current liabilities of $176.6 million). Stockholders' equity as of December 31, 2010 was $370.9 million, up 25% from $296.8 million at the end of 2009.

We generated $68.6 million in cash flow from operating activities, an increase of $27.8 million compared to net cash provided by operating activities of $40.8 million in 2009. Net cash used in investing activities decreased by $18.2 million to $100.8 million in 2010 from $119.0 million in 2009. The company invested $28.2 million less on the construction of new production facilities, $2.7 million more on acquiring land use rights, and $5.1 million more in restricted cash so that the company could issue bank payable notes. The cash invested for building new production facilities was part of the company's development strategy to increase its geographical market coverage. Counterbalancing the increase in net cash flow was a decline of $60.5 million to $44.9 million in cash provided by financing activities in 2010, from $105.4 million in 2009. In 2009, the company received $57.1 million of net proceeds from issuing common stock, but the company did not issue common stock in 2010. In 2010, the company received $20.8 million more in net proceeds from long-term bank loans (net of repayments), and $21.1 million less in net proceeds from capital lease obligations. In addition, it repaid $12.4 million more in short-term bank loans during 2010.

Zhongpin believes its existing cash and cash equivalents, together with our ability to secure bank borrowings, will be sufficient to finance its investment in new facilities, with budgeted capital expenditure of about $142.8 million over the next 12 months, and to satisfy its working capital needs. It intends to satisfy its short-term debt obligations that mature over the next 12 months through additional short-term bank loans, in most cases by rolling over the maturing loans into new short-term loans with the same lenders.

2011 Guidance

In 2011, we expect that Zhongpin's sales revenues will be within a range of $1.18 billion to $1.23 billion, with gross profit margin with the range of 11.7% to 12.4%, and net income margin within the range of 5.7% to 6.3%. The resulting diluted earnings per share for the year 2011 are currently expected to be within the range of $1.89 to $2.18 per share, assuming average diluted common shares outstanding of about 35.5 million in 2011. This guidance is based in part on an expectation that we will achieve a higher percentage of sales from our higher-margin chilled pork and prepared pork products in 2011 than in 2010.

Food safety

Our ability to maintain the highest quality products is based on three key strategies. We believe that these will serve us well as major consolidation begins within the Chinese meat products industry.

First, Zhongpin's upstream hog suppliers are for the most part standardized live hog breeding farms and brokerages. Zhongpin's hog suppliers share the same commitment to the strictest quality assurance and control systems as Zhongpin and make their own quality control guarantees. In this way, we are able to satisfy national quality standards, quality assurance and control requirements, and the demand of our high-end clients for the highest quality.

Second, Zhongpin possesses national-level quality inspection centers, and each of its slaughtering and processing facilities meet and comply with all relevant certifications, including ISO 9001, HACCP (Hazard Analysis and Critical Control Point), GMP, and SSOP. All live hogs, half-finished products, and finished products are inspected to the strictest standards. As a standard operating procedure, if any contaminants or illicit or poisonous chemicals, such as the lean drug clenbuterol, are found in the processing lines, Zhongpin immediately conducts harmless disposal to eliminate all possibly contaminated material and contaminates. This standard practice is rigorously followed. The Chinese government has provided subsidies to help assure that our products are safe.

Third, because Zhongpin starts with the highest quality hogs and has the most advanced quality assurance systems available together with quality control inspections, Zhongpin is recognized as a premium supplier. Our customers are willing to pay a higher price for our products because of the reputation we have established for food safety. This is an element of our brand image that will be invaluable as the industry moves into a restructuring phase, driven both by government policy and consumer demand.

Outlook

By 2025, according to the McKinsey Global Institute, China will add 350 million people to its cities, more than the population of the United States today. China's GDP will be five times larger, and urban consumer markets will rise from 25% of GDP, or RMB 3.9 trillion, to 33% or RMB 21.7 trillion by 2025. The tastes, habits, and aspirations of this "urban billion" will reshape not only the Chinese economy but potentially the global economy as well. Much of the growth will come from third tier cities – China will have 221 cities with populations over 1 million(1).

All of us whose business depends on the future shape of the Chinese economy see similar trends. At Zhongpin, we are preparing ourselves for a period of industry consolidation over the next five years, as government policy and market demand combine to reshape the Chinese meat industry. We believe that we have the financial and managerial resources to thrive during this challenging period.

For us, it will be a period of growth and opportunity. We have positioned Zhongpin to take advantage of urbanization and the aspirational values associated with it, that demand better quality, variety, and above all safety in food products. Our core business, pork, is at the heart of this transformation simply because it is in the heart of the Chinese people and very much on the menu of every special occasion. At Zhongpin, we celebrate the rise of the Chinese consumer and his and her demand for higher standards in all areas of life.

Looking back at 2010 and ahead to 2011, I would like to thank all of you for your support, whether you are a fellow shareholder, a management colleague, one of our 121 research and development personnel, 306 quality assurance specialists, 1,275 sales people or 5,402 operating personnel, out of our corporate family of 7,138 people. Our most heartfelt thanks must go to our customers, for their lively interest in new products and attachment to China's favorite source of protein, pork.

(1)  McKinsey Global Institute, "Preparing for China's urban billion", March 2009

Xianfu Zhu

Chairman, President and Chief Executive Officer

About Zhongpin

Zhongpin Inc. is a meat and food processing company that specializes in pork and pork products, vegetables, and fruits in China. Its distribution network in China covers 20 provinces plus Beijing, Shanghai, Tianjin, and Chongqing and includes more than 3,300 retail outlets. Zhongpin's export markets include Europe, Hong Kong, and certain countries in Asia. For more information, please visit www.zpfood.com.

Safe harbor statement

Certain statements in this news release are forward-looking statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Zhongpin has based its forward-looking statements largely on its current expectations and projections about future events and trends that it believes may affect its business strategy, results of operations, financial condition, and financing needs. These forward-looking statements can be recognized by the use of words such as "anticipates," "estimates," "expects," "intends," "plans," "projects," "will," or words of similar meaning. These forward-looking statements are not guarantees of future performance and are based on a number of assumptions about the Zhongpin's operations, and are subject to risks, uncertainties, and other factors beyond the Zhongpin's control.

These projections involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, which may include but are not limited to such factors as downturns in the Chinese economy, unanticipated changes in product demand, interruptions in the supply of live pigs and or raw pork, the effects of weather on hog feed production, poor performance of the retail distribution network, delivery delays, freezer facility malfunctions, Zhongpin's ability to build and commence new production facilities according to intended timelines, the ability to prepare Zhongpin for growth, the ability to predict Zhongpin's future financial performance and financing ability, changes in regulations, and other information detailed in Zhongpin's filings with the United States Securities and Exchange Commission. These filings are available at www.sec.gov or at www.zpfood.com.

You are urged to consider these factors carefully in evaluating Zhongpin's forward-looking statements, whether written or oral, and whether made by or on behalf of Zhongpin, and are cautioned not to place undue reliance on those forward-looking statements, which are expressly qualified in their entirety by this cautionary statement. All information provided in this news release is as of the date of this release. Zhongpin does not undertake any obligation to update any forward-looking statement as a result of new information, future events, or otherwise, except as required by law.

For more information, please contact:

Zhongpin Inc.

Mr. Sterling Song (English and Chinese)
Investor Relations Manager
Telephone +86 10 8286 1788 extension 101 in Beijing
ir@zhongpin.com

Mr. Warren (Feng) Wang (English and Chinese)
Chief Financial Officer
Telephone +86 10 8286 1788 extension 104 in Beijing
warren.wang@zhongpin.com

Christensen

Mr. Christian Arnell (English and Chinese)
Telephone +86 10 5826 4939 in Beijing
carnell@christensenir.com

Mr. Tom Myers (English)
Mobile +86 139 1141 3520 in Beijing
tmyers@christensenir.com

Ms. Kathy Li (English and Chinese)
Telephone +1 212 618 1978
kli@christensenir.com