10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x         QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

or

¨         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                                            To

Commission File Number : 001-33593

	Zhongpin Inc.
(Exact name of registrant as specified in its charter)

Delaware	54-2100419
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

21 Changshe Road, Changge City, Henan Province, People’s Republic of China	461500
(Address of principal executive offices)	(Zip Code)

	011 86 10-8455 4188
(Registrant’s telephone number, including area code)

	Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety (90) days. YES x NO ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer ¨ Accelerated filer x   Non-accelerated filer ¨  (Do not check if a smaller reporting company) Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO x

As of May 6, 2013, 37,209,344 shares of the registrant’s common stock were outstanding.

ZHONGPIN INC.

FORM 10-Q

INDEX

			Page
Part I	Financial Information
	Item 1.	Financial Statement:	1
		Condensed Consolidated Balance Sheets as of March 31, 2013 (unaudited) and December 31, 2012	2
		Condensed Consolidated Statements of Operations and Comprehensive Income (unaudited) for the three-month periods ended March 31, 2013 and 2012	3
		Condensed Consolidated Statements of Cash Flows (unaudited) for the three- month periods ended March 31, 2013 and 2012	4
		Notes to Condensed Consolidated Financial Statements (unaudited)	5
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
	Item 4.	Controls and Procedures	38
Part II	Other Information
	Item 1.	Legal Proceedings	39
	Item 1A.	Risk Factors	41
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
	Item 3.	Defaults Upon Senior Securities	41
	Item 4.	Mine Safety Disclosures	41
	Item 5.	Other Information	41
	Item 6.	Exhibits	41
Signatures			42

ZHONGPIN INC.

Part I - Financial Information

Item 1. Financial Statements

The accompanying unaudited condensed consolidated balance sheets, statements of operations and comprehensive income, and statements of cash flows and the related notes thereto, have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and in conjunction with the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the disclosures required by GAAP for complete financial statements. The condensed consolidated financial statements reflect all adjustments, consisting only of normal, recurring adjustments, which are, in the opinion of management, necessary for a fair presentation for the interim periods.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the notes to the aforementioned condensed consolidated financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2012.

The results of operations for the three months ended March 31, 2013 are not necessarily indicative of the results to be expected for the entire fiscal year or any other period.

1

ZHONGPIN INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in U.S. dollars)

	March 31, 2013			December 31, 2012
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	294,315,174		$	176,441,332
Restricted cash		105,866,898			109,954,161
Bank notes receivable		102,110,143			72,369,700
Accounts receivable, net of allowance for doubtful accounts of $6,666,258 and $4,775,526		120,800,332			85,167,801
Other receivables, net of allowance for doubtful accounts of $509,084 and $493,484		977,803			865,060
Purchase deposits		7,034,952			6,798,356
Inventories		34,600,019			37,979,226
Prepaid expenses		389,955			449,127
Allowance receivable		958,698			956,166
VAT recoverable		33,410,038			32,719,543
Deferred tax assets		802,297			800,179
Other current assets		699,311			73,413
Total current assets		701,965,620			524,574,064
Long-term investment		478,553			477,289
Property, plant and equipment, net		514,193,986			470,447,775
Deposits for purchase of land use rights		15,389,482			17,285,461
Construction in progress		46,193,135			86,509,865
Land use rights		118,412,570			116,785,769
Other non-current assets		4,452,434			2,554,680
Total assets	$	1,401,085,780		$	1,218,634,903
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term loans	$	246,785,205		$	228,632,849
Bank notes payables		209,955,495			219,333,386
Long-term loans - current portion		45,303,004			52,183,597
Short-term financial bonds		95,710,571			—
Capital lease obligation - current portion		7,298,023			—
Accounts payable		13,498,479			11,918,351
Other payables		23,663,592			24,053,321
Accrued liabilities		19,335,514			18,353,887
Deposits from customers		7,343,501			9,935,877
Tax payable		1,396,404			1,778,724
Deferred subsidy - current portion		84,943			84,852
Total current liabilities		670,374,731			566,274,844
Deferred tax liabilities		745,839			743,869
Long-term loans		143,374,475			101,792,652
Capital lease obligation		24,605,501			—
Deferred subsidy - long-term portion		2,371,185			2,386,002
Total liabilities		841,471,731			671,197,367
Equity
Common stock: par value $0.001; 100,000,000 authorized; 40,376,182 and 40,376,182 shares issued as of March 31, 2013 and December 31, 2012; and 37,209,344 and 37,209,344 shares outstanding as of March 31, 2013 and December 31, 2012		40,376			40,376
Additional paid-in capital		240,063,993			240,063,993
Retained earnings		288,878,462			278,268,748
Treasury stock, at cost: 3,166,838 and 3,166,838 shares at March 31, 2013 and December 31, 2012		(26,225,646	)		(26,225,646	)
Accumulated other comprehensive income		55,967,484			54,413,960
Total Zhongpin Inc. shareholders’ equity		558,724,669			546,561,431
Non-controlling interests		889,380			876,105
Total shareholders’ equity		559,614,049			547,437,536
Total liabilities and shareholders’ equity	$	1,401,085,780		$	1,218,634,903

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

ZHONGPIN INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Amount in U.S. dollars) (Unaudited)

	Three Months Ended March 31,
	2013			2012
Revenues
Sales revenues	$	382,358,018		$	374,127,384
Cost of sales		(343,913,400	)		(338,651,649	)
Gross profit		38,444,618			35,475,735
Operating expenses
General and administrative expenses		(11,117,768	)		(9,416,975	)
Selling expenses		(8,650,157	)		(6,437,120	)
Research and development expenses		(132,331	)		(86,628	)
Total operating expenses		(19,900,256	)		(15,940,723	)
Income from operations		18,544,362			19,535,012
Other income (expense)
Interest expense, net		(8,289,066	)		(7,625,481	)
Other income, net		400,325			563,605
Government subsidies		776,718			915,348
Total other expense		(7,112,023	)		(6,146,528	)
Net income before taxes		11,432,339			13,388,484
Provision for income taxes		(811,687	)		(1,193,329	)
Net income after taxes		10,620,652			12,195,155
Net (income) loss attributable to non-controlling interests		(10,938	)		2,160
Net income attributable to Zhongpin Inc. shareholders		10,609,714			12,197,315
Foreign currency translation adjustment		1,555,861			582,654
Foreign currency translation adjustment attributable to non-controlling interests		(2,337	)		(863	)
Foreign currency translation adjustment attributable to Zhongpin Inc. shareholders		1,553,524			581,791
Comprehensive income		12,176,513			12,777,809
Comprehensive (income) loss attributable to non-controlling interests		(13,275	)		1,297
Comprehensive income attributable to Zhongpin Inc. shareholders	$	12,163,238		$	12,779,106
Basic earnings per common share	$	0.29		$	0.33
Diluted earnings per common share	$	0.28		$	0.33
Basic weighted average shares outstanding		37,209,344			37,498,563
Diluted weighted average shares outstanding		37,278,630			37,503,019

The accompanying notes are an integral part of these condensed consolidated financial statements.

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ZHONGPIN INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amount in U.S. dollars) (Unaudited)

	Three Months Ended March 31,
	2013			2012
Cash flows from operating activities:
Net income	$	10,620,652		$	12,195,155
Adjustments to reconcile net income to net cash used in operations:
Depreciation		5,899,289			5,537,984
Amortization of land use rights		644,802			516,966
Provision for allowance for bad debt		1,889,563			1,657,949
Other income		(88,790	)		(129,699	)
Deferred subsidy		(21,236	)		—
Stock-based compensation		—			417,749
Changes in operating assets and liabilities:
Accounts receivable		(37,228,084	)		(31,521,161	)
Other receivables		(124,907	)		(950,981	)
Purchase deposits		(218,259	)		1,489,444
Prepaid expenses		60,153			75,128
Inventories		3,474,455			(13,251,435	)
Allowance receivables		—			2,160,068
VAT recoverable		(602,931	)		(5,225,549	)
Other current assets		(2,023	)		(118,029	)
Deferred charges		—			1,855
Accounts payable		1,546,201			28,643,061
Other payables		(318,966	)		(2,035,430	)
Accrued liabilities		933,980			388,216
Tax payable		(400,248	)		373,669
Deposits from customers		(2,614,682	)		(3,541,776	)
Deposits from customers - long-term portion		—			(338,991	)
Net cash used in operating activities		(16,551,031	)		(3,655,807	)
Cash flows from investing activities:
Deposits for purchase of land use rights		—			(10,555,624	)
Construction in progress		(5,413,842	)		(11,461,585	)
Additions to property and equipment		(2,267,416	)		(2,585,772	)
Additions to land use rights		(21,559	)		—
Proceeds on sale of fixed assets		—			5,905
Net cash used in investing activities		(7,702,817	)		(24,597,076	)
Cash flows from financing activities:
Proceeds from (repayment of) bank notes, net		(39,447,085	)		9,806,307
Proceeds from  short-term bank loans		60,524,010			88,785,573
Repayment of short-term bank loans		(43,003,902	)		(49,538,008	)
Proceeds from long-term loans		54,790,156			7,926,069
Repayment of long-term loans		(20,549,090	)		—
Proceeds from short-term financial bonds, net of issuance costs		95,181,970			—
Proceeds from capital lease obligation, net of issuance costs		29,529,346			—
Repayment of capital lease obligation		—			(1,498,250	)
Repurchase of common stock		—			(2,812,322	)
Increase in restricted cash		4,371,725			—
Net cash provided by financing activities		141,397,130			52,669,369
Effects of rate changes on cash		730,560			226,450
Increase in cash and cash equivalents		117,873,842			24,642,936
Cash and cash equivalents, beginning of period		176,441,332			135,845,095
Cash and cash equivalents, end of period	$	294,315,174		$	160,488,031
Supplemental disclosures of cash flow information:
Cash paid for interest		9,596,014			8,122,027
Cash paid for income taxes		1,199,986			819,660

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

ZHONGPIN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND NATURE OF OPERATIONS

Zhongpin Inc. (the “Company”) was established under the laws of the State of Delaware on February 4, 2003.  The Company is a public holding company holding equity interests in its subsidiaries outside the U.S. Its operating subsidiaries are located in the People’s Republic of China (the “PRC”) and focus on two business divisions: pork and pork products, and vegetables and fruits. The pork and pork products division is involved primarily in the processing of live hogs into fresh, frozen and processed pork products which are sold domestically to branded stores, food retailers, food service distributors, restaurants, hotel chains and non-commercial food service establishments, such as schools, governments, healthcare facilities, the military and other food processors, as well as to certain international markets in a limited scope. The vegetables and fruits division is involved primarily in the processing of frozen vegetables and fruits that are sold to the Company’s branded stores and food retailers.

The Company holds a 100% interest in Falcon Link Investment Limited, a company organized under the laws of the British Virgin Islands (“Falcon”), through which the Company holds a 100% interest in its China-based subsidiaries, each of which was organized under the laws of China. The Company’s China-based subsidiaries include the following:

Name	Date of Incorporation		Registered/Authorized Capital	Percentage  of Ownership
Henan Zhongpin Food Company Limited		May 20, 2005	$203,300,000		100	%
Henan Zhongpin Food Share Company Limited (“Henan Zhongpin”)		Jan. 20, 2000	1,430,000,000 RMB ($219,699,181)		100	%(1)
Henan Zhongpin Import and Export Trading Company Limited		Aug. 11, 2004	5,060,000 RMB ($611,111)		100	%
Zhumadian Zhongpin Food Company Limited (“Zhumadian Zhongpin”)		June 7, 2006	60,000,000 RMB ($8,585,398)		100	%
Anyang Zhongpin Food Company Limited		Aug. 21, 2006	34,800,000 RMB ($5,094,422)		100	%
Henan Zhongpin Fresh Food Logistics Company Limited		Sept. 14, 2006	1,500,000 RMB ($189,665)		100	%
Deyang Zhongpin Food Company Limited		Sept. 25, 2006	15,000,000 RMB ($1,893,652)		100	%
Henan Zhongpin Business Development Company Limited		Sept. 27, 2006	5,000,000 RMB ($632,215)		100	%
Luoyang Zhongpin Food Company Limited (“Luoyang Zhongpin”)		Jan. 18, 2007	60,000,000 RMB ($8,703,452)		100	%
Yongcheng Zhongpin Food Company Limited (“Yongcheng Zhongpin”)		Mar. 1, 2007	60,000,000 RMB ($8,783,487)		100	%
Tianjin Zhongpin Food Company Limited (“Tianjin Zhongpin”)		Sept. 14, 2007	100,000,000 RMB ( $14,639,145 )		100	%

5

ZHONGPIN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Name	Date of Incorporation		Registered/Authorized Capital	Percentage  of Ownership
Jilin Zhongpin Food Company Limited		Dec. 11, 2008	1,000,000 RMB ($145,688)		100	%
Henan Zhongpin Agriculture and Animal Husbandry Industry Development Company Limited		Dec. 26, 2008	10,000,000 RMB ($1,461,796)		100	%
Taizhou Zhongpin Food Company Limited (“Taizhou Zhongpin”)		May 12, 2010	100,000,000 RMB ($15,872,008)		100	%
Changchun Zhongpin Food Company Limited (“Changchun Zhongpin”)		Aug. 6, 2010	170,000,000 RMB ($26,292,994)		100	%
Henan Zhongpin Xinda Agriculture and Animal Husbandry Company Limited		Jun. 1, 2011	15,000,000 RMB ($2,287,841)		65	%
Kunshan Zhongpin Cold Chain Logistics Company Limited		Jun. 3, 2011	300,000,000 RMB ($46,356,388)		100	%
Tangshan Zhongpin Food Company Limited		Nov. 15, 2011	5,000,000 RMB ($788,196)		100	%
Zhongpin (Hong Kong) Trading Co., Limited		Sept. 11, 2012	$1,000,000		100	%
Tianjin Jinghui Hogs Breeding Company Limited		Nov.12, 2012	1,000,000RMB ($158,700)		100	%

(1)         Includes a 1.19% ownership interest of another six stockholders with respect to which Henan Zhongpin Food Company Limited is entitled to all economic benefits and the right to vote pursuant to the terms of a trust agreement with such stockholders.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation and Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of Zhongpin Inc. and its subsidiaries (collectively referred to herein as the “Company”). All significant intercompany accounts and transactions have been eliminated during the process of consolidation. The condensed consolidated financial statements were prepared in accordance with GAAP for interim financial information.

Non-controlling Interests

Effective July 1, 2009, the Company adopted the authoritative pronouncement issued by the Financial Accounting Standards Board (the “FASB”) regarding non-controlling interests in consolidated financial statements. The pronouncement requires non-controlling interests to be separately presented as a component of equity in the consolidated financial statements.

6

ZHONGPIN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Foreign Currency Translations and Transactions

RMB, the national currency of China, is the primary currency that the Company’s China-based subsidiaries use. The United States dollar (“U.S. dollar”) is the functional currency used by Falcon and Zhongpin Inc. to record all of their activities. The Company uses the U.S. dollar for financial reporting purposes.

The Company translates assets and liabilities into U.S. dollars using the middle rate published by the People’s Bank of China as of the balance sheet date. The condensed consolidated statement of income is translated at average rates during the reporting period. Adjustments resulting from the translation of financial statements from RMB into U.S. dollars are recorded in stockholders' equity as part of accumulated comprehensive loss – translation adjustments. Gains or losses resulting from transactions in currencies other than RMB are reflected in income for the reporting period.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Certain accounting principles require subjective and complex judgments to be used in the preparation of financial statements. Accordingly, a different financial presentation could result depending on the judgments, estimates, or assumptions that are used. Such estimates and assumptions include, but are not specifically limited to, those required in the valuation of long-lived assets, allowance for doubtful accounts, reserves for inventory obsolescence, valuation allowances for value added tax (“VAT”) recoverable, deferred tax assets and determination of stock based compensation.

Revenue Recognition

Revenues generated from the sales of various meat products and vegetables and fruits are recognized when these products are delivered to customers in accordance with previously agreed upon pricing and delivery arrangements, and the collectability of these sales is reasonably assured. Since the products sold by the Company are primarily perishable and frozen food products, the right of return is only valid for a few days and has been determined to be insignificant by the management of the Company. Accordingly, no provision has been made for returnable goods. Revenues presented on the consolidated statements of operations and comprehensive income are net of sales taxes.

Cash and Cash Equivalents

The Company considers all highly-liquid investments with maturity of three months or less to be cash equivalents. The Company maintains its cash accounts at creditworthy financial institutions and closely monitors the movements of its cash positions.

Restricted Cash and Bank Notes Payable

Under the terms of the credit agreements with certain of its lenders, Henan Zhongpin has agreed to maintain with such lenders an amount of cash that will serve as collateral for its delivery of such lenders’ bank promissory notes. The amount of bank promissory notes that are to be delivered by Henan Zhongpin to such lenders can be up to twice the amount of such deposits. As such deposits may not be withdrawn by Henan Zhongpin without restriction, such cash deposits are presented as “restricted cash” on the consolidated balance sheets.

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ZHONGPIN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Bank Notes Receivable

The Company only accepts notes issued by banks in the normal course of business as payment for products sold by the Company. These bank notes receivable have maturity dates of up to 180 days and bear no interest. In addition, the Company may also acquire bank notes receivable, with maturity of less than six months, from third parties, at a lower cost compared to the face value of the bank notes, so as to earn the interest.

The Company can hold these bank notes until the maturity date and collect the amount from the issuing banks, or the Company can use these bank notes as means for payment for goods or services received. The Company accrues no provision for these bank notes because such bank notes have little risk of default in China.

Accounts Receivable

During the normal course of business, the Company's policy is to ask customers to make deposits in reasonable and meaningful amounts on a case-by-case basis. For certain customers, the Company may extend unsecured credit.

The Company regularly evaluates and monitors the creditworthiness of each of its customers in accordance with the prevailing practice in the meat industry and based on general economic conditions in China. The Company maintains a general policy of providing 100% allowance for doubtful accounts in an amount equal to the aggregate amount of those accounts that are not collected within one year plus an amount equal to 5% of the aggregate amount of accounts receivable less than one year old. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. The Company also examines the credit terms of significant customers regularly and asks for more cash deposits if these customers appear to have any indicators of delaying their payments to the Company. Such deposits are usually applied for the collection of the outstanding accounts receivable during the year. With such a practice in place, the Company did not have any specific allowance for doubtful accounts provided against specific customers at March 31, 2013 and December 31, 2012, respectively.

The following table presents allowance activities in accounts receivable.

	March 31, 2013		December 31, 2012
Beginning balance	$	4,775,526	$	2,323,920
Additions to allowance for bad debt		1,875,215		2,478,601
Exchange difference		15,517		(26,995	)
Ending balance	$	6,666,258	$	4,775,526

Inventories

Inventories are comprised of raw materials and low-value consumables, work-in-progress, and finished goods. Inventories are stated at the lower of cost or market-based prices according to the weighted average method. Production cost components include the purchase cost of live hogs, direct labor, depreciation, packaging material, utility expense and other manufacturing overhead. By using a systematic costing system, the production cost is allocated to various products at the stage of work-in-progress and finished goods, respectively. Net realizable value is the estimated selling price, in the ordinary course of business, less estimated costs to complete and dispose. The Company regularly inspects the shelf life of prepared foods and, if necessary, write down their carrying value based on their salability and expiration dates as cost of goods sold.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost and are stated net of accumulated depreciation. Depreciation expense is determined using the straight-line method over the estimated useful lives of the assets. Leased properties under capital leases are also amortized over the estimated useful life of the property due to the transfer of ownership or availability of bargain purchase option at the end of the lease term. Estimated useful lives of the assets are as follows:

8

ZHONGPIN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	Estimated Useful Economic Life
Plants and buildings	5-30 years
Machinery and equipment	5-20 years
Office furniture and equipment	3-5 years
Vehicles	5 years

Maintenance and repairs are charged directly to expense as incurred, whereas improvements and renewals are generally capitalized in their respective property accounts. When an item is retired or otherwise disposed of, the cost and applicable accumulated depreciation are removed and the resulting gain or loss is recognized and reflected as a line item under other income (expenses).

Land Use Rights

The Chinese government owns all of the parcels of land on which the Company's plants are built. In China, land use rights for commercial purposes are granted by the PRC government typically for a term of 40-50 years. The Company is required to pay a lump sum of money to the State Land and Resource Ministry of the applicable locality to acquire such rights. The Company capitalizes the lump sum of money paid and amortizes these land use rights by using the straight line method over the term of the land use license granted by the applicable governmental authority.

Construction in Progress and Interest Capitalization

Construction in progress is stated at cost. The cost accumulation process starts from the time the construction project is set-up and ends at the time the project has been put into service and all regulatory permits and approvals have been received. The Company borrows bank loans from time to time for these construction projects. The interest costs incurred for these construction projects have been capitalized during the construction process.

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of that asset. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.

Fair Value of Financial Instruments

The carrying amount of cash and cash equivalents, accounts receivable, other receivables, advance to vendors, accounts payable and accrued liabilities, capital lease obligations and short-term loans are reasonable estimates of their fair value because of the short maturity of these items. The carrying amounts of capital lease obligations approximate their fair value based on the Company’s current incremental borrowing rates for similar types of arrangements. Long-term debt approximates fair value since the bank term loans are fixed rate instruments and bear interests at the rate dictated and published by the People's Bank of China. The current rates published by the People's Bank of China approximate the interest rates of the loans outstanding.

Employee Benefit Plan

Full time employees of the PRC entities participate in a government mandated employer defined contribution plan, pursuant to which certain pension benefits, medical care, unemployment insurance and other welfare benefits are provided to employees. Chinese labor regulations require the Company to accrue for these benefits based on certain percentages of the employees’ salaries. The total provision for such employee benefits was $655,743 and $227,438 for three months ended March 31, 2013 and 2012.

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ZHONGPIN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Shipping and Handling Cost

All shipping and handling fees are included in selling expenses. Shipping and handling fees amounted to $2.4 million and $ 2.4 million for the three months ended March 31, 2013 and 2012, respectively.

Advertising Costs

Advertising costs are expensed as incurred. Advertising expense amounted to $377,261 and $282,921 for the three months ended March 31, 2013 and 2012, respectively.

Value Added Tax

All China-based enterprises are subject to a VAT imposed by the PRC government on their domestic product sales. The output VAT is charged to customers who purchase goods from the Company and the input VAT is paid when the Company purchases goods from its vendors. Input VAT rates are 13% for most of the purchasing activities conducted by the Company. Output VAT rate is 13% for chilled pork products, frozen pork products and vegetable and fruit products, and 17% for prepared meat products. The input VAT can be offset against the output VAT. The VAT payable or recoverable balance presented on the condensed consolidated balance sheets represents either the input VAT less than or larger than the output VAT. The debit balance represents a credit against future collections of output VAT instead of a receivable.

On a quarterly basis, the Company forecasts for each of its subsidiaries separately the amount of sales revenue necessary to fully utilize the VAT recoverable. Once the VAT recoverable for a subsidiary is determined to be non-recoverable in part or in full, the VAT recoverable is written off and booked as cost of goods sold or as impairment loss, depending on the nature of the event triggering the VAT write-off. The factors considered when evaluating to which account VAT recoverable is written off are as follows: i) if VAT is determined to be non-recoverable due to significant underperformance relative to expected historical or projected future operating results or negative industry or economic trend, VAT recoverable will be written-off to cost of goods sold, or ii) if VAT is determined to be non-recoverable due to significant changes in the strategy of the overall business, VAT recoverable would be written off as impairment loss. VAT write-off amounted to $1.9 million and nil for the three months ended March 31, 2013 and 2012, respectively.

Leases

The Company classified its leases at the inception date as either a capital lease or an operating lease. A lease is a capital lease if the following conditions exist: a) ownership is transferred to the lessee by the end of the lease term, b) there is a bargain purchase option, c) the lease term is at least 75% of the property’s estimated remaining economic life or d) the present value of the minimum lease payments at the beginning of the lease term is 90% or more of the fair value of the leased property to the lessor at the inception date. A capital lease is accounted for as if there was an acquisition of an asset and an incurrence of an obligation at the inception of the lease. All other leases are accounted for as operating leases. In March 2013, the Company entered into a sale-leaseback agreement with CMB Financial Leasing Co., Ltd. (“CMB Leasing”) to sell and lease back equipment. For details of the transaction, see Note 14, “Commitments and Contingencies”.

Stock Compensation

The Company receives employee and certain non-employee services in exchange for (a) equity instruments of the Company or (b) liabilities that are based on the fair value of the Company's equity instruments or that may be settled by the issuance of such equity instruments. The Company accounts for stock compensation expense under the fair value recognition provisions of the FASB Accounting Standards Codification (ASC) Topic 718 (ASC 718), which requires companies to estimate the fair value of share-based payment awards on the date of grant using an option pricing model. See Note 10, "Equity Transactions", for further discussion on stock compensation expense.

10

ZHONGPIN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Earnings Per Share

Basic earnings per share does not include dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution of securities that could share in the earnings of an entity, similar to fully-diluted earnings per share. Such shares are excluded if determined to be anti-dilutive. Of the 787,000 options outstanding at March 31, 2013, 514,000 options were anti-dilutive and therefore excluded from the computation of diluted earnings per share for the three months ended March 31, 2013. The number of shares of common stock underlying the outstanding stock warrants and options at March 31, 2013 and December 31, 2012 were 273,000 and 240,000, respectively, which were all included in the computation of diluted earnings per share.

Government Subsidies

The Company’s subsidiaries in China receive government subsidies from local Chinese government agencies in accordance with relevant Chinese government policies. In general, the Company presents the government subsidies received as part of other income unless the subsidies received are earmarked to compensate a specific expense, which have been accounted for by offsetting the specific expense, such as interest expenses. Unearned government subsidies received are deferred for recognition until the criteria for such recognition could be met.

Research and Development Expenses

Research and development costs are expensed as incurred. The research and development expenses for the three-month periods ended March 31, 2013 and 2012 were $132,331 and $86,628, respectively. The Company did not receive government subsidies that were specified for supporting the Company’s research and development efforts for the three-month periods ended March 31, 2013 and 2012.

Comprehensive Income (Loss)

The Company adopted FASB ASC 220, Comprehensive Income , which establishes standards for reporting and presentation of comprehensive income (loss) and its components in a full set of general-purpose financial statements. The Company has chosen to report comprehensive income (loss) in the statements of operations and comprehensive income. Comprehensive income (loss) is comprised of net income and all changes to shareholders' equity except those due to investments by owners and distributions to owners.

Recently Issued Accounting Pronouncements

In January 2013, the FASB issued Accounting Standards Update (“ASU”) 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarified that the scope of ASU 2011-11, Disclosures about Offsetting Assets and Liabilities, would apply to derivatives including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or are subject to a master netting arrangement or similar agreement. This ASU is effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013. Retrospective presentation for all comparative periods presented is required. The adoption of ASU 2013-01 did not have a material impact on the Company’s consolidated financial statements.

In February 2013, the FASB issued ASU 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, which superseded and replaced the presentation requirements for reclassifications out of accumulated other comprehensive income in ASUs 2011-05 (issued in June 2011) and 2011-12 (issued in December 2011) for all public and private organizations. The amendments would require an entity to provide additional information about reclassifications out of accumulated other comprehensive income. For public entities, the amendments are effective prospectively for reporting periods beginning after December 15, 2012, with early adoption permitted. The adoption of ASU 2013-02 did not have a material impact on the Company’s consolidated financial statements.

11

ZHONGPIN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3. INVENTORIES

Inventories at March 31, 2013 and December 31, 2012 consisted of the following:

	March 31, 2013		December 31, 2012
	(Unaudited)
Raw materials	$	4,684,028	$	6,466,664
Low value consumables and packaging		1,568,000		1,685,431
Work-in-progress		4,202,916		3,955,169
Finished goods		24,145,075		25,871,962
Total	$	34,600,019	$	37,979,226

4. PROPERTY, PLANT AND EQUIPMENT

A summary of property, plant and equipment at cost at March 31, 2013 and December 31, 2012 is as follows:

	March 31, 2013			December 31, 2012
	(Unaudited)
Plants and buildings, net of impairment	$	407,508,102		$	368,003,263
Machinery and equipment, net of impairment		154,610,707			156,202,442
Office furniture and equipment		7,263,995			7,101,927
Vehicles		4,917,002			4,522,289
Accumulated depreciation		(60,105,820	)		(65,382,146	)
Total	$	514,193,986		$	470,447,775

The depreciation and amortization expenses for the three months ended March 31, 2013 and 2012 were $5,899,289 and $5,537,984, respectively.

Of the above information, property, plant and equipment under the sale-leaseback agreement at cost at March 31, 2013 and December 31, 2012 is as follows:

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ZHONGPIN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	March 31, 2013			December 31, 2012
	(Unaudited)
Plants and buildings	$	4,869,288		$	—
Machinery and equipment		42,542,027			—
Vehicles		127,271			—
Accumulated depreciation		(165,193	)		—
Total	$	47,373,393		$	—

The deferred losses included in the property, plant and equipment balance were $3,713,441 and nil at March 31, 2013 and December 31, 2012, respectively, and would be amortized over the lease term. Of the depreciation expenses, $78,888 and $164,939 were amortization of deferred loss and depreciation expense from assets under capital lease, respectively, for the three months ended March 31, 2013; and $373,995 and $280,688 were amortization of deferred loss and depreciation expense from assets under capital lease, respectively, for the three months ended March 31, 2012.

5. LAND USE RIGHTS

The Company’s land use rights at March 31, 2013 and December 31, 2012 are as follows:

	March 31, 2013			December 31, 2012
	(Unaudited)
Land use rights	$	127,278,183		$	124,983,885
Accumulated amortization		(8,865,613	)		(8,198,116	)
Total	$	118,412,570		$	116,785,769

The amortization expenses for the three months ended March 31, 2013 and 2012 were $644,802 and $516,966, respectively.

6. CONSTRUCTION IN PROGRESS

Construction in progress at March 31, 2013 and December 31, 2012 consisted of the following:

Construction Project	Date or Estimated Date Put in Service(1)	March 31, 2013		December 31, 2012
		(Unaudited)
Production facility for prepared pork products in Tianjin	February 2013	$	—	$	2,215,713
Upgrade for production facility in other locations	April 2013		36,211		375,627
Kunshan facility land preparation cost	April 2013		598,191		42,868,890
Upgrade for production facility in Anyang	May 2013		41,525,141		40,838,785
Improvement in Changge industrial park	July 2013		109,317		164,712
Production  facility for chilled and frozen pork in Changchun (second phase)	November 2013		95,852		46,138
Research and development building in Changge	December 2013		3,828,423		—
Total		$	46,193,135	$	86,509,865

Estimated cost to complete current construction in progress is $9.3 million. 

 _______________

(1) Represents date all regulatory permits and approvals are received and project is placed in service. In certain cases, construction of a project may be substantially completed and the project may be operational during a testing period prior to such date.

13

ZHONGPIN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

7. SHORT-TERM BANK LOANS

Short-term bank loans are due within one year. Of the $246.8 million and $176.4 million aggregate principal amount of short-term bank loans at March 31, 2013 and December 31, 2012, loans in the aggregate principal amount of $113.2 million and $116.1 million were guaranteed by the Company’s subsidiaries in China, loans in the aggregate principal amount of $8.0 million and $8.0 million were secured by the land use right of the Company’s subsidiaries in China, $111.2 million and $85.4 million aggregate principal amount of loans was credit loans, and loans in the aggregate principal amount of $14.4 million and $19.1 million were guaranteed by Henan Huanghe Enterprises Group Co., Ltd., an unaffiliated third party (“Huanghe Group”). These loans bear interest at prevailing lending rates in China ranging from 5.88 % to 7.20% per annum.

8. SHORT-TERM BONDS

In March 2013, Henan Zhongpin issued RMB600 million (approximately US$95.7 million) aggregate principal amount of 5.15% unsecured non-convertible one-year bonds which will mature and be repaid on March 27, 2014.

14

ZHONGPIN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

9. LONG-TERM BANK LOANS

Amounts outstanding under the Company’s long-term debt arrangements at March 31, 2013 and December 31, 2012 were as follows:

Bank	March 31, 2013			December 31, 2012
	(Unaudited)
China Construction Bank	$	24,725,231		$	24,659,932
Agriculture Bank of China		101,453,205			76,525,336
Canadian Government Transfer Loan		1,052,087			1,052,087
China Merchants Bank		11,963,821			11,932,225
China Development Bank		47,855,286			38,183,120
Changge Old Town		1,627,849			1,623,549
Total long-term loan		188,677,479			153,976,249
Current portion		(45,303,004	)		(52,183,597	)
Total long-term portion	$	143,374,475		$	101,792,652

In March 2013, Henan Zhongpin entered into a loan agreement with China Construction Bank pursuant to which Henan Zhongpin borrowed RMB 20 million ($3.2 million). All amounts borrowed under the loan agreement bear interest at a fixed rate of 6.15% and are payable in March 2015. Borrowings under the loan agreement are secured by land use rights, property and plant of Henan Zhongpin.

In March 2013, Henan Zhongpin entered into a loan agreement with the Agriculture Bank of China pursuant to which Henan Zhongpin borrowed RMB 100 million ($16.0 million). All amounts borrowed under the loan agreement bear interest at a floating rate that is based on the prime rate published by the People’s Bank of China for loans with the same or similar terms on the drawdown date (6.46% per annum on March 31, 2013 and adjustable on each anniversary of the agreement based on the prime rate published by the People’s Bank of China for loans with the same or similar terms) and are payable in installments on various scheduled repayment dates between June 2013 and March 2016. Borrowings under the loan agreement are secured by the land use rights, property and plant of Henan Zhongpin.

In January 2013, Taizhou Zhongpin entered into a loan agreement with the Agriculture Bank of China pursuant to which Taizhou Zhongpin may borrow up to RMB 180 million ($28.7 million). Taizhou Zhongpin drew down RMB 44 million ($7.0 million) in January 2013 and RMB 120 million ($19.1 million) in March 2013. All amounts borrowed under the loan agreement bear interest at a floating rate that is based on the prime rate published by the People’s Bank of China for loans with the same or similar terms on the drawdown date (7.04% per annum on March 31, 2013 and adjustable on each anniversary of the agreement based on the prime rate published by the People’s Bank of China for loans with the same or similar terms) and RMB 164 million ($26.2 million) are payable in installments on various scheduled repayment dates between January 2014 and January 2018. Borrowings under the loan agreement are guaranteed by Henan Zhongpin and secured by land use rights of Taizhou Zhongpin.

In April 2012, Changchun Zhongpin entered into a loan agreement with China Development Bank pursuant to which Changchun Zhongpin may borrow up to RMB 300 million ($47.9 million). Changchun Zhongpin drew down RMB 125 million ($19.9 million) in April 2012, RMB 76 million ($12.1 million) in July 2012, RMB39 million ($6.2 million) in October 2012 and RMB 60 million ($9.6 million) in February 2013. All amounts borrowed under the loan agreement bear interest at a floating rate that is based on the prime rate published by the People’s Bank of China for loans with the same or similar terms on the drawdown date (7.21% per annum on March 31, 2013 and adjustable immediately following the publishing of rate adjustments by the People’s Bank of China during the term of the loan) and are payable in installments on various scheduled repayment dates between April 2013 and May 2020. Borrowings under the loan agreement are guaranteed by Henan Zhongpin and secured by all of Henan Zhongpin’s equity interests in Tianjin Zhongpin and Yongcheng Zhongpin.

15

ZHONGPIN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In April 2012, Henan Zhongpin entered into a loan agreement with China Construction Bank pursuant to which Henan Zhongpin borrowed RMB 15 million ($2.4 million). All amounts borrowed under the loan agreement bear interest at a floating rate that is based on the prime rate published by the People’s Bank of China for loans with the same or similar terms on the drawdown date (6.65% per annum on March 31, 2013 and adjustable on each anniversary of the agreement based on the prime rate published by the People’s Bank of China for loans with the same or similar terms) and are payable in March 2014. Borrowings under the loan agreement are secured by the land use rights, property and plant of Yongcheng Zhongpin.

In March 2012, Henan Zhongpin entered into a loan agreement with China Construction Bank pursuant to which Henan Zhongpin borrowed RMB 50 million ($8.0 million). All amounts borrowed under the loan agreement bear interest at a floating rate that is based on the prime rate published by the People’s Bank of China for loans with the same or similar terms on the drawdown date (6.65% per annum on March 31, 2013 and adjustable on each anniversary of the agreement based on the prime rate published by the People’s Bank of China for loans with the same or similar terms) and are payable in March 2014. Borrowings under the loan agreement are secured by the land use rights, property and plant of Yongcheng Zhongpin.

In June 2011, Henan Zhongpin entered into a loan agreement with China Construction Bank pursuant to which Henan Zhongpin borrowed RMB 50 million ($8.0 million). All amounts borrowed under the loan agreement bear interest at a floating rate that is based on the prime rate published by the People’s Bank of China for loans with the same or similar terms on the drawdown date (6.08% per annum on March 31, 2013 and adjustable on each anniversary of the agreement based on the prime rate published by the People’s Bank of China for loans with the same or similar terms) and are payable in installments in March and June 2013. Borrowings under the loan agreement are secured by the land use rights, property and plant of Henan Zhongpin. Henan Zhongpin has repaid $3.2 million in March 2013, and $4.8 million remained outstanding as of March 31, 2013.

In September 2010, Henan Zhongpin entered into a loan agreement with the Agriculture Bank of China pursuant to which Henan Zhongpin borrowed RMB 75 million ($12.0 million). All amounts borrowed under the loan agreement bear interest at a floating rate that is based on the prime rate published by the People’s Bank of China for loans with the same or similar terms on the drawdown date (6.40% per annum on March 31, 2013 and adjustable in the month immediately following the publishing of rate adjustments by the People’s Bank of China during the term of the loan) and are payable in installments on various scheduled repayment dates between September 2011 and December 2014. Borrowings under the loan agreement are guaranteed by Zhumadian Zhongpin. Henan Zhongpin has repaid an aggregate of $0.7 million, and $11.3 million remained outstanding as of March 31, 2013.

In July 2010, Tianjin Zhongpin entered into a loan agreement with the Agriculture Bank of China pursuant to which Tianjin Zhongpin may borrow up to RMB 300 million ($47.9 million). Tianjin Zhongpin drew down RMB 50 million ($8.0 million) in July 2010, RMB 80 million ($12.8 million) in November 2010 and RMB 110 million ($17.5 million) in May 2011. As of March 31, 2013, the total outstanding balance under the agreement was $38.3 million and Tianjin Zhongpin had $9.6 million available for borrowing under the loan agreement. All amounts borrowed under the loan agreement bear interest at a floating rate that is based on the prime rate published by the People’s Bank of China for loans with the same or similar terms on the drawdown date (6.40% per annum on March 31, 2013 and adjustable in the month immediately following the publishing of rate adjustments by the People’s Bank of China during the term of the loan) and are payable in installments in June 2013, 2014 and 2015. Borrowings under the loan agreement are secured by the land use rights, property and plant of Tianjin Zhongpin.

In June 2010, Henan Zhongpin entered into a loan agreement with China Construction Bank pursuant to which Henan Zhongpin borrowed RMB 40 million ($6.4 million). All amounts borrowed under the loan agreement bear interest at a floating rate that is based on the prime rate published by the People’s Bank of China for loans with the same or similar terms on the drawdown date (5.76% per annum on March 31, 2013 and adjustable on each anniversary of date of the agreement based on the prime rate published by the People’s Bank of China for loans with the same or similar terms) and are payable on June 29, 2013. Borrowings under the loan agreement are secured by the land use rights, property and plant of Henan Zhongpin.

16

ZHONGPIN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In April 2010, in connection with the purchase of a piece of land from Changge Old Town, Changge Old Town extended a loan to Henan Zhongpin with a principal amount of RMB 10.2 million ($1.6 million) and bearing interest at the rate of 7.00% per annum payable on June 30, 2010 and each anniversary thereafter. Such loan does not have a fixed term and the principal amount of the loan should be repaid by Henan Zhongpin upon six months prior written notice from Changge Old Town. The full amount of the loan remained outstanding as of March 31, 2013.

In December 2009, Henan Zhongpin entered into a loan agreement with the Agriculture Bank of China pursuant to which Henan Zhongpin borrowed RMB 70 million ($11.2 million). All amounts borrowed under the loan agreement bear interest at a floating rate that is based on the prime rate published by the People’s Bank of China for loans with the same or similar terms on the drawdown date (6.40% per annum on March 31, 2013 and adjustable in the month immediately following the publishing of rate adjustments by the People’s Bank of China during the term of the loan) and are payable in installments on various scheduled repayment dates between December 2010 and December 2014. Borrowings under the loan agreement are secured by the land use rights, property and plant of Luoyang Zhongpin. Henan Zhongpin has repaid an aggregate of $1.5 million, and $9.7 million remained outstanding as of March 31, 2013.

In November 2009, Henan Zhongpin entered into a loan agreement with China Merchants Bank pursuant to which Henan Zhongpin borrowed RMB 95 million ($15.2 million). The first 50% of the loan was drawn down in November 2009 and the remaining 50% of the loan was drawn down in March 2010. All amounts borrowed under the loan agreement bear interest at a floating rate that is based on the prime rate published by the People’s Bank of China for loans with the same or similar terms on the drawdown date (6.40% per annum on March 31, 2013 and adjustable in the month immediately following the publishing of rate adjustments by the People’s Bank of China during the term of the loan) and are payable in installments on various scheduled repayment dates between November 2012 and November 2014. Borrowings under the loan agreement are guaranteed by Luoyang Zhongpin.

In May 2002, Henan Zhongpin entered into a loan agreement with the Bank of Communications, Zhengzhou Branch, which is the intermediary bank for a 40-year term loan in the amount of $2,504,969 from the Canadian government. Under the terms of the loan agreement, 58% of the principal amount ($1,452,882) of this loan bears interest at the fixed rate of 6.02% per annum and remaining principal amount of this loan is interest free. The loan is repayable in a fixed amount of $42,083, which includes both principal and interest, that is payable on a semi-annual basis through November 15, 2041. Borrowings under the loan agreement are guaranteed by the Financing Department of Henan province.

Of the $435.5 million short-term and long-term loans outstanding as of March 31, 2013, $134,154,317 are secured by land use rights and property, plant and equipment of the Company’s subsidiaries. The total amount of land use rights and property, plant and equipment pledged was $191,620,720 as of March 31, 2013.

10. EQUITY TRANSACTIONS

During the three months ended March 31, 2013 and 2012, the stock-based compensation expenses were nil and $417,749, respectively.

During the three months ended March 31, 2013 and 2012, no warrants or options were exercised.

During the three months ended March 31, 2013 and 2012, the Company repurchased nil and 368,300 shares of common stock from the public market, respectively. The average cost per share, including commission, was $8.4023 for repurchased shares for the three months ended March 31, 2012.

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ZHONGPIN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

11. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted net earnings per share for the periods indicated:

	Three Months Ended March 31,
	2013		2012
	(Unaudited)		(Unaudited)
Numerator:
Net income attributable to common shares	$	10,609,714	$	12,197,315
Denominator:
Weighted average number of common shares outstanding – basic		37,209,344		37,498,563
Dilutive effect of stock options		69,286		4,456
Weighted average number of common shares outstanding – diluted		37,278,630		37,503,019
Basic earnings per share	$	0.29	$	0.33
Diluted earnings per share	$	0.28	$	0.33

Of the 787,000 options and warrants outstanding at March 31, 2013, 514,000 options were anti-dilutive and therefore excluded from the computation of diluted earnings per share for the three months ended March 31, 2013. 273,000 options and warrants were dilutive and therefore included in the computation of diluted earnings per share for the three months ended March 31, 2013.

12. FAIR VALUE MEASUREMENT

The Company has adopted ASC Topic 820, Fair Value Measurement and Disclosure, which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. It does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. It establishes a three-level valuation hierarchy of valuation techniques based on observable and unobservable inputs, which may be used to measure fair value and include the following:

Level 1 – Quoted prices in active markets for identical assets or liabilities.

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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ZHONGPIN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement.

The carrying value of financial items of the Company including cash and cash equivalents, restricted cash, other receivables, advance to vendors, accrued liabilities and short-term borrowings loans, approximate their fair values due to their short-term nature and are classified within Level 1 of the fair value hierarchy. The Company’s financial items are classified within Level 1 of the fair value hierarchy. The carrying amount of cash and cash equivalents, accounts receivable, other receivables, advance to vendors, accounts payable, accrued liabilities, short-term financial bonds and short-term loans are reasonable estimates of their fair value because of the short term nature of these items.

The following table sets forth the Company's financial assets and liabilities not measured at fair value on a recurring basis and where they are classified within the hierarchy as of March 31, 2013:

	Total		Level 1		Level 2		Level 3
Capital leases	$	31,903,524		—	$	31,903,524		—
Note receivable	$	64,794,294		—	$	64,794,294		—
Long term loans	$	188,677,479		—	$	188,677,479		—

Note receivable approximates fair value since it bears interest at Shanghai interbank offered rate, as is normally charged for notes of similar nature. Long-term debt approximates fair value since the bank term loans are fixed rate instruments and bear interests at the rate dictated and published by the People's Bank of China. The current rates published by the People's Bank of China approximate the interest rates of the loans outstanding.

13. SEGMENT REPORTING

The Company operates in only one segment: meat production. The Company's vegetable and fruit operations, both financially and operationally, do not represent a significant enough portion of its business to constitute a separate segment. However, the Company’s product lines are divided into two divisions: pork and pork products, and vegetables and fruits.

The pork and pork products division is involved primarily in the processing of live hogs into fresh, frozen and processed pork products. The pork and pork products division markets its products domestically to retail stores and to food retailers, food service distributors, restaurant operators and noncommercial food service establishments, such as schools, hotel chains, healthcare facilities, the military and other food processors, as well as in certain international markets on a limited basis.

The vegetables and fruits division is involved primarily in the processing of fresh vegetables and fruits. The Company contracts with more than 100 farms in Henan province and nearby areas to produce high-quality vegetable varieties and fruits suitable for export purposes. The proximity of the contracted farms to operations ensures freshness from harvest to processing. The Company contracts with those farms to grow more than 25 categories of vegetables and fruits, including asparagus, sweet corn, broccoli, mushrooms, lima beans and strawberries.

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ZHONGPIN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	Sales by Division (U.S. dollars in millions) Three Months Ended March 31,
	2013			2012
	(Unaudited)			(Unaudited)
Pork and Pork Products:
Chilled Pork	$	243.1		$	248.8
Frozen Pork		58.6			67.0
Prepared Pork Products		78.4			55.7
Vegetables and Fruits		2.3			2.6
Total	$	382.4		$	374.1
Cost of Sales
Pork Products	$	341.9		$	336.4
Vegetables and Fruits		2.0			2.3
Gross Profit Margin:
Pork Products		10.0	%		9.4	%
Vegetables and Fruits		13.0	%		11.5	%

14. COMMITMENTS AND CONTINGENCIES

Mutual Guarantee

In May 2012, Henan Zhongpin entered into a mutual guarantee agreement with Huanghe Group, upon the expiration of a previous mutual guarantee agreement between Henan Zhongpin and Huanghe Group. Under the agreement, Henan Zhongpin agreed to guarantee bank loans of Huanghe Group in an amount up to $23.9 million and Huanghe Group agreed to guarantee Henan Zhongpin’s bank loans in an amount up to $23.9 million. The agreement will expire in May 2013. At the expiration of the agreement, each party will remain obligated under its guarantee for any loans of the other party that are outstanding on the date of expiration of the agreement.

The business purpose for the mutual guarantee is to provide each party with a credit line from banks that would have otherwise been unavailable absent the guarantee. As bank credit loans are generally unavailable in China, companies are required to provide either a pledge of assets, a third-party guarantee or a combination of both in order to receive loans. In the case of pledges, companies can pledge their assets, including, among other things, land, buildings and machines, to banks as collateral to secure loans; however, banks generally will only loan up to 50% to 70% of the value of the pledged assets. Alternatively, if a company provides the banks with a guarantee agreement, the banks generally will loan up to 90% to 100% of the amount being guaranteed.

Henan Zhongpin’s obligation as guarantor to repay loans on behalf of Huanghe Group will only arise if Huanghe Group cannot repay its loans and proceeds from liquidating Huanghe Group’s pledged assets are insufficient to cover its outstanding debt. Henan Zhongpin’s actual liability for such guarantee, should the guarantee obligation become due, will vary depending on the difference between the outstanding bank loan plus accrued interest and the proceeds received for the liquidated collateral. Henan Zhongpin did not pledge any of its assets in connection with the mutual guarantee agreement as this guarantee was not based on credit quality concerns, but rather based on the local banks’ requirements. In the event Henan Zhongpin is required to pay all or a portion of any loans covered by the mutual guarantee, Henan Zhongpin would seek reimbursement for such payment from Huanghe Group.

At March 31, 2013, Henan Zhongpin had outstanding guarantees for $19.7 million of Huanghe Group’s bank loans under the agreement. All of the bank loans guaranteed by Henan Zhongpin will mature within the next 12 months. As a result, the maximum potential amount of future payments (undiscounted) Henan Zhongpin could be obligated to make under the mutual guarantee at such date was $19.7 million. The Company did not record any liability on its balance sheet with respect to this mutual guarantee as the Company believes, based upon its continuing due diligence on Huanghe Group and its business, that Henan Zhongpin’s liability there under remains contingent.

20

ZHONGPIN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Legal Proceedings

On March 27, 2012, the Company announced that its Board of Directors had received a preliminary, non-binding proposal from the Company’s Chairman and Chief Executive Officer, Xianfu Zhu, stating that Mr. Zhu intended to seek to purchase the remaining shares of the Company that he does not presently own (the “Proposed Buyout”). Following this announcement, at least three lawsuits have been filed in Delaware naming the members of the Company's Board of Directors and/or the Company as defendants. On November 26, 2012, the Company announced that it had entered into a definitive merger agreement with Golden Bridge Holdings Limited, a Cayman Islands exempted company ("Parent"), Golden Bridge Merger Sub Limited, a Delaware corporation and wholly owned subsidiary of Parent ("Merger Sub") and Mr. Xianfu Zhu, which was subsequently amended and restated on February 8, 2013 (the “Merger Agreement”). Pursuant to the Merger Agreement and subject to the satisfaction or waiver of the conditions to the transactions contemplated thereby, at the effective time of the merger, each share of the Company common stock issued and outstanding immediately prior to the effective time (other than shares owned by (i) Parent or Merger Sub, (ii) Mr. Xianfu Zhu, Mr. Baoke Ben, Mr. Chaoyang Liu, Mr. Qinghe Wang, Mr. Shuichi Si and Ms. Juanjuan Wang, (iii) the Company or any direct or indirect wholly-owned subsidiary of the Company or (iv) stockholders who have properly exercised and perfected appraisal rights under Delaware law), will be converted automatically into the right to receive $13.50 in cash, without interest. On March 15, 2013, the Company filed with the SEC a Schedule 13e-3 relating to the Proposed Buyout together with a preliminary proxy statement relating to a special meeting of stockholders to adopt the Merger Agreement (collectively, and together with all filings with the SEC that are ancillary thereto, and all amendments and supplements thereof, the “Transaction Filings”).

Following the November 2012 announcement of the Merger Agreement, two additional lawsuits were filed in Delaware naming as defendants the members of the Company’s Board of Directors, the Company, Parent, and Merger Sub. It is possible that more lawsuits will occur. 

On April 3, 2012, a verified shareholder class action lawsuit was filed by Phillip Meeks in the Court of Chancery of the State of Delaware against the Company and members of its Board of Directors, alleging that, inter alia, the Company's Board of Directors breached their fiduciary duties in connection with the Proposed Buyout, and that the price per share proposed by Mr. Zhu represented inadequate consideration in light of the Company’s intrinsic value and future prospects, and that the Company aided and abetted the breach of fiduciary duties. The plaintiff seeks damages, declaratory relief and injunctive relief, including an order preventing the Company from proceeding with the Proposed Buyout or any transaction with Mr. Zhu, as well as an award of plaintiffs’ attorneys’ fees and costs. The Company believes that none of the defendants has yet responded to the complaint.

On April 11, 2012, a verified shareholder class action lawsuit was filed by Richard Bauschard in the Court of Chancery of the State of Delaware against members of the Company's Board of Directors, alleging that, inter alia, the Board of Directors breached their fiduciary duties in connection with the Proposed Buyout, and that the price per share proposed by Mr. Zhu represented inadequate consideration in light of the Company’s intrinsic value and future prospects. The plaintiff seeks damages, declaratory relief and injunctive relief, including an order preventing the defendants from proceeding with the Proposed Buyout or any transaction with Mr. Zhu, as well as an award of plaintiffs’ attorneys’ fees and costs. On April 12, 2013, plaintiff Richard Bauschard filed an amended complaint. The amended complaint names the same defendants and includes the same cause of action alleging breach of fiduciary duties, but the amended complaint includes additional allegations relating to the terms of the Merger Agreement and the disclosures contained in the preliminary proxy statement filed by the Company on March 15, 2013 with the SEC. The Company believes that none of the defendants has yet responded to the complaint.

21

ZHONGPIN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On April 18, 2012, a verified shareholder class action lawsuit was filed by Harry Vonderlieth in the Court of Chancery of the State of Delaware against the Company and members of its Board of Directors, alleging that, inter alia, the Company's Board of Directors breached their fiduciary duties to the shareholders in connection with the Proposed Buyout, and that the price per share proposed by Mr. Zhu represented inadequate consideration in light of the Company’s intrinsic value and future prospects, and that the Company aided and abetted the breach of fiduciary duties. The plaintiff seeks damages, declaratory relief and injunctive relief, including an order preventing the Company from proceeding with the Proposed Buyout or any transaction with Mr. Zhu, as well as an award of plaintiffs’ attorneys’ fees and costs. The Company believes that none of the defendants has yet responded to the complaint. On May 2, 2013, plaintiff Harry Vonderlieth voluntarily dismissed this case and the Court of Chancery of the State of Delaware granted the dismissal on May 3, 2013.

On December 4, 2012, after the announcement of the Company’s entering into the Merger Agreement, a verified shareholder class action lawsuit was filed by Ernesto Rodriguez in the Court of Chancery of the State of Delaware against the Company and members of its Board of Directors, Parent and Merger Sub, alleging that, inter alia, the Company’s Board of Directors breached their fiduciary duties to the Company’s shareholders in connection with the Proposed Buyout and the Merger Agreement, and that the price per share and other terms provided for in the Merger Agreement are inadequate and unfair in light of the Company’s intrinsic value and future prospects, and that the Company, Parent and Merger Sub aided and abetted the breach of fiduciary duties.  The plaintiff seeks damages, declaratory relief and injunctive relief, including an order preventing the Company from proceeding with the Proposed Buyout or any transaction with Mr. Zhu, as well as an award of plaintiffs’ attorneys’ fees and costs. On or about February 6, 2013, the plaintiff served document discovery on the individual defendants. On April 12, 2013, plaintiff Ernesto Rodriguez filed an amended complaint. The amended complaint names the same defendants and includes the same cause of action alleging breach of fiduciary duties, but the amended complaint includes additional allegations relating to the disclosures contained in the preliminary proxy statement filed by the Company on March 15, 2013 with the SEC. The Company believes that none of the defendants has yet responded to the complaint or the discovery served by the plaintiff. 

On April 23, 2013, after the announcement of the Company’s entering into the Merger Agreement and certain of the Transaction Filings were made, a verified shareholder class action lawsuit was filed by Alan Hall in the Court of Chancery of the State of Delaware against the Company and members of its Board of Directors, Parent and Merger Sub, alleging that, inter alia, the Company’s Board of Directors breached their fiduciary duties to the Company’s shareholders in connection with the Proposed Buyout and the Merger Agreement, and that the price per share and other terms provided for in the Merger Agreement are inadequate and unfair in light of the Company’s intrinsic value and future prospects, that the Transaction Filings contain materially misleading misstatements and omissions, and that the Company, Parent and Merger Sub aided and abetted the breach of fiduciary duties. The plaintiff seeks damages, declaratory relief and injunctive relief, including an order preventing the Company from proceeding with the Proposed Buyout, or any transaction with Mr. Zhu, as well as an award of plaintiffs’ attorneys’ fees and costs. The Company believes that none of the defendants has yet responded to the complaint.

On or about April 22, 2013, plaintiff Richard Bauschard filed a motion to consolidate and appoint lead counsel with the Court of Chancery of the State of Delaware, moving the Court for an order providing for (i) the consolidation of the aforesaid lawsuits filed by Phillip Meeks, Richard Bauschard, Harry Vonderlieth and Ernesto Rodriguez, and (ii) the appointment of lead counsel and Delaware liaison counsel in the consolidated matter. The Company believes that none of the defendants has yet responded to the motion.

The Company intends to defend against the pending class action litigation vigorously.

In accordance with accounting standards regarding loss contingencies, the Company accrues an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated, and the Company discloses the amount accrued and an estimate of any reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for the Company’s financial statements not to be misleading. The Company does not accrue liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated, or when the liability is believed to be only reasonably possible or remote.

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ZHONGPIN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Because litigation outcomes are inherently unpredictable, the evaluation of legal proceedings often involves a series of complex assessments by management about future events and can rely heavily on estimates and assumptions. If the assessments indicate that loss contingencies that could be material to any one of the Company’s financial statements are not probable, but are reasonably possible, or are probable, but cannot be estimated, then the Company discloses the nature of the loss contingencies, together with an estimate of the possible loss or a statement that such loss is not reasonably estimable.

With respect to the legal proceedings and claims described above, such litigation is still in its preliminary stages and the final outcome, including the Company’s liability, if any, with respect to such litigation, is uncertain. At present, the Company is unable to estimate a reasonably possible range of loss, if any, that may result from such litigation. If an unfavorable outcome were to occur in the litigation described above, the impact could be material to the Company’s business, financial condition, or results of operations.

In addition, it is not possible to determine the maximum potential amount under the indemnification provisions under the terms and conditions of applicable bylaws, certificates or articles of incorporation, agreements or applicable law due to the limited history of prior indemnification claims and the preliminary stages of the litigation.

Capital Leases

In March 2013, Henan Zhongpin entered into a sale-leaseback agreement with CMB Leasing pursuant to which Henan Zhongpin sold to CMB Leasing equipment with a net book value of $47.6million for $43.8 million and leased such equipment back. The lease payments for this equipment are paid on a quarterly basis over a four-year period and consist of a fixed payment based upon a 48-month amortization of the purchase price plus an interest component that is based upon the rate announced from time to time by the People’s Bank of China for three-year loans. At March 31, 2013, the quarterly rental fee under the agreement was $2,246,214, which included an interest component calculated at the rate of 5.82% and adjustable in the quarter following any rate adjustments published by the People’s Bank of China. The sale-leaseback agreement will end in March 2017. Henan Zhongpin has the right to repurchase all of the equipment under the sale-leaseback agreement for a nominal purchase price at the end of the lease term. The sale-leaseback agreement was guaranteed by Mr. Xianfu Zhu, the Company’s Chairman and Chief Executive Officer.

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Disclosure Regarding Forward-Looking Statements

The statements contained in this Report with respect to our financial condition, results of operations and business that are not historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of the Exchange Act. Forward-looking statements can be identified by the use of forward-looking terminology, such as “estimates,” “projects,” “plans,” “believes,” “expects,” “anticipates,” “intends,” or the negative thereof or other variations thereon, or by discussions of strategy that involve risks and uncertainties. Management wishes to caution the reader of the forward-looking statements that any such statements that are contained in this Report reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors, including, but not limited to, economic, competitive, regulatory, technological, key employee, and general business factors affecting our operations, markets, growth, services, products, licenses and other factors discussed in our filings with the Securities and Exchange Commission, and that these statements are only estimates or predictions. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of risks facing our company, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events.

These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause our actual results to be materially different from any future results expressed or implied by us in those statements. Some of these risks are described in “Risk Factors” under Part II, Item 1A herein and in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2012.

These risk factors should be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. All written and oral forward looking statements made in connection with this Report that are attributable to our company or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Given these uncertainties, we caution investors not to unduly rely on our forward-looking statements. We do not undertake any obligation to review or confirm analysts’ expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date of this Report or to reflect the occurrence of unanticipated events. Further, the information about our intentions contained in this Report is a statement of our intention as of the date of this Report and is based upon, among other things, the existing regulatory environment, industry conditions, market conditions and prices, the economy in general and our assumptions as of such date. We may change our intentions, at any time and without notice, based upon any changes in such factors, in our assumptions or otherwise.

Overview

We are principally engaged in the meat and food processing and distribution business in China. Currently, we have 15 processing plants in China, located in Henan, Jiangsu and Jilin provinces and in the municipality of Tianjin. Our total production capacity for chilled pork and frozen pork is approximately 1,899.3 metric tons per eight-hour day, or approximately 683,760 metric tons on an annual basis. In addition, we have production capacity for prepared meats of approximately 488.9 metric tons per eight-hour day, or approximately 176,000 metric tons on an annual basis, and for vegetables and fruits of approximately 83.3 metric tons per eight-hour day, or approximately 30,000 metric tons on an annual basis. We have annual production capacity for food oil (pork oil) of approximately 20,000 metric tons. We also have annual production capacity for 100 million meters of sausage casings and 300 billion units of raw material to make heparin sodium. We use state-of-the-art equipment in all of our processing facilities and sell all of our products under our “Zhongpin” brand name.

In December 2009, the PRC Ministry of Commerce issued the Hog Slaughtering Industry Development Guidelines for 2010−2015. The guidelines state that the government will control the number of slaughterhouses in China and specifically that there should be less than four slaughterhouses in urban areas of municipalities and cities with a resident population of five million or more, and less than two slaughterhouses in urban areas of other cities at or above the prefecture level.

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In June 2010, the China Meat Association (“CMA”) announced the China Meat Industry Development Strategy Report for 2011−2015. In that report, CMA provided a development roadmap and targets for the meat industry for the coming five years:

Ø To decrease the sales of room temperature pork to below 50% of total pork sales in cities at or above county level in China by 2015;

Ø To increase the sales of chilled pork to around 30% of the total pork sales in China by 2015;

Ø To decrease outstanding licenses for slaughterhouses from more than 21,000 to around 3,000 in China by 2015; and

Ø To build pork and pork product production bases in North China, Northeast China, East China and Southwest China.

The report indicates to us that there is an opportunity to consolidate and integrate the industry for companies with strong brand recognition in China's meat industry, high quality facilities and products, strict quality control systems and cold chain logistics capabilities.

Government and consumers take food safety as one of their top priorities. With the government support, the consolidation of the industry is accelerating.

Our growth strategy will include expanding our production capacity in the strategic areas in response to the suggestions in the report. We plan to build new facilities for chilled and frozen pork, as well as new facilities for prepared pork products and cold chain logistic distribution centers. We may also explore opportunities to acquire companies with strong regional brand recognition that produce prepared pork products using high quality facilities. We expect that these new facilities, together with our existing ones, will help us to build “Zhongpin” into a stronger, national brand, increase our market share, revenues and net income and strengthen our ability to take advantage of consolidation opportunities in the meat industry in China.

We put into operation, are currently constructing, or plan to construct, additional production facilities in different parts of China:

l We are investing approximately $18.0 million in a cold chain logistic distribution center in Anyang, Henan province. This distribution center will have a 27,000 square meters temperature adjustable warehouse, processing capacity, distribution center and quality control center. This distribution center will be used for third party cold chain logistic service. We expect to put this distribution center into operation in the second quarter of 2013.

l We are investing approximately $87.5 million in a chilled and frozen food processing and distribution center in Kunshan, Jiangsu province, which is near Shanghai city. The whole center will be built in three phases. The first phase will include a processing center, cold chain logistics center and business complex. We invested about $35.0 million on the first phase and put it into operation in February 2013.

l We are investing approximately $58.5 million to build a new production, research and development, and training complex in Changge, Henan province excluding the cost of land use rights that we have already obtained. When completed, we anticipate that this new facility will have a production capacity of approximately 100,000 metric tons for prepared pork products. Adjacent to this new production facility, we also plan to develop a center for research and development, training, as well as quality assurance and control. Construction for the first phase with a production capacity of approximately 50,000 metric tons for prepared pork products started in the second quarter of 2011 and was completed in the second quarter of 2012. We started trial production in this facility in July 2012, and started the regular production at the end of the third quarter of 2012.

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l We established a joint venture company, of which we own 65%, with Henan Xinda Animal Husbandry Company Limited in June 2011. The joint venture company is financed by capital contributions and bank loans. All capital contributions to the joint venture company have been made . We expect the new company will provide 20,000 sire boars annually. Upon the completion of the building of infrastructures for sire boars breeding in the third quarter of 2012, we leased the facility to a third party for annual rental in the amount of RMB5.0 million.

l We will be investing approximately $47.6 million to build a cold-chain logistic distribution center in Tangshan, Hebei province. This distribution center will have a 27,000 square meters temperature adjustable warehouse, processing capacity, distribution center, and quality control center. This distribution center will be used for third-party cold-chain logistics service. We expect to put this distribution center into operation in the fourth quarter of 2013.

Our products are sold under the “Zhongpin” brand name. As of March 31, 2013, our wholesale customers included 158 international and domestic fast food companies in China, 167 processing factories and 1,392 school cafeterias, hotels, factory canteens, army bases, and government departments. As of such date, we also sold directly to 3,502 retail outlets, including supermarkets, within China.

We have established distribution networks in 20 provinces and in the four central government- administered municipalities of Beijing, Shanghai, Tianjin and Chongqing in the North, East, South and Mid-South regions of China, and have also formed strategic business alliances with leading supermarket chains within China. We also export our products to Europe, Hong Kong as well as other selected countries and regions in Asia.

As of March 31, 2013, we had 7,492 employees, of whom 5,551 were operating personnel, 1,432 were sales personnel, 130 were research and development personnel and 379 were administrative personnel. We are not subject to any collective bargaining agreement and we believe our relationship with our employees is good.

On March 27, 2012, our Board of Directors received a preliminary non-binding proposal from our Chairman and Chief Executive Officer, Mr. Xianfu Zhu, to buy all of the shares of our common stock not currently owned by him for $13.50 per share (the “Proposed Buyout”). Following receipt of the proposal, our Board of Directors formed a special committee of independent directors to consider the proposal and any amendments thereto as well as any alternative proposals. . On November 26, 2012, we entered into a definitive Agreement and Plan of Merger with Golden Bridge Holdings Limited, a Cayman Islands exempted company with limited liability (“Parent”), Golden Bridge Merger Sub Limited, a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”) and Mr. Xianfu Zhu, which was subsequently amended and restated on February 8, 2013 (the “Merger Agreement”). Pursuant to the Merger Agreement and subject to the satisfaction or waiver of the conditions to the transactions contemplated thereby, at the effective time of the merger, each share of our common stock issued and outstanding immediately prior to the effective time (other than shares owned by (i) Parent or Merger Sub, (ii) Mr. Xianfu Zhu, Mr. Baoke Ben, Mr. Chaoyang Liu, Mr. Qinghe Wang, Mr. Shuichi Si and Ms. Juanjuan Wang (collectively, the “Rollover Holders”), (iii) our company or any direct or indirect wholly-owned subsidiary of us or (iv) stockholders who have properly exercised and perfected appraisal rights under Delaware law), will be converted automatically into the right to receive $13.50 in cash (the “Per Share Merger Consideration”), without interest. Collectively, the Rollover Holders own approximately 26% of our outstanding common stock. The Per Share Merger Consideration of $13.50 represents a premium of approximately 47% over the closing price on March 26, 2012, the last trading day prior to our March 27, 2012 announcement of the Proposed Buyout. Under the Merger Agreement, the going private transaction contemplated thereunder is required to be approved by affirmative vote of the holders of a majority of the outstanding shares of our common stock and a majority of outstanding shares of our common stock other than shares of our common stock owned by Parent, Merger Sub, the Rollover Holders, and their respective affiliates at a stockholders’ meeting. There can be no assurance that the going private transaction will receive the required vote.

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Critical Accounting Policies

Unless otherwise noted, all translations from RMB to U.S. dollars were made at the middle rate published by the People’s Bank of China, or the middle rate, as of March 29, 2013, which was RMB6.2689 to $1.00. We make no representation that the RMB amounts referred to in this Quarterly Report on Form 10-Q could have been or could be converted into U.S. dollars at any particular rate or at all. On May 6, 2013, the middle rate was RMB6.2114 to $1.00.

Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles.  The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses.  We continually evaluate our policies and estimation procedures. Estimates are often based on historical experience and on assumptions that are believed to be reasonable under the circumstances, but which could change in the future.  Actual results may differ from these estimates under different assumptions or conditions.

Critical accounting policies are defined as those that are reflective of significant judgments, estimates and uncertainties, and potentially result in materially different results under different assumptions and conditions.  We believe the following are our critical accounting policies:

Revenue Recognition.  Revenues generated from the sale of various meat products and vegetables and fruits are recognized when these products are delivered to customers in accordance with previously agreed upon pricing and delivery arrangements, and the collectability of these sales is reasonably assured. Since the products sold by us are primarily perishable and frozen food products, the right of return is only valid for a few days and has been determined to be insignificant by our management. Accordingly, no provision has been made for returnable goods. Revenues presented on our consolidated income statements are net of sales taxes.

Accounts Receivable. During the normal course of business, our policy is to ask customers to make deposits in reasonable and meaningful amounts on a case-by-case basis. We have established strict credit policies to manage the credit we give to our customers, and we give different credit terms to different types of customers in different sales channels. For supermarket customers, the credit terms are generally four to eight weeks. For showcase stores and branded stores, the credit terms are generally cash sales within one week. For food distributors, the credit terms are generally two to four weeks. For restaurants and food service customers, the credit terms are four to eight weeks. These credit terms are subject to negotiation if requested by our customers, and credit limits vary depending on the credit worthiness and sales volume of the individual customers, which may be increased at times to accommodate for deteriorating economic circumstances. Any adjustment must be approved and credit limits are frequently reviewed by designated management.

We regularly evaluate and monitor the creditworthiness of each of our customers in accordance with the prevailing practice in the meat industry, considering factors such as general economic conditions and industry-specific economic condition in China, historical customer performance, as well as anticipated customer performance. We maintain a general policy of providing 100% allowance for doubtful accounts in an amount equal to the aggregate amount of those accounts that are not collected within one year plus an amount equal to 5% of the aggregate amount of accounts receivable less than one year old. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. We also examine the credit terms of significant customers regularly and ask for more cash deposits if these customers appear to have any indicators of delaying their payments to us. Such deposits are usually applied towards the outstanding accounts receivable. The focus of our collection effort is on receivable balances less than one year old, as receivable over a year old has typically been insignificant compared to the total gross receivable. With such a practice in place, we did not have any specific bad debt allowance provided against specific customers as of March 31, 2013.

Inventories.  Inventories are comprised of raw materials and low-value consumables, work-in-progress, and finished goods. Inventories are stated at the lower of cost or market-based prices according to the weighted average method. Production cost components include the purchase cost of live hogs, direct labor, depreciation, packaging material, utility expense and other manufacturing overhead. By using a systematic costing system, the production cost is allocated to various products at the stage of work-in-progress and finished goods, respectively. Net realizable value is the estimated selling price, in the ordinary course of business, less estimated costs to complete and dispose. We regularly inspect the shelf life of prepared foods and, if necessary, writes down their carrying value based on their salability and expiration dates as cost of goods sold.

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Leases. We classified our leases at the inception date as either a capital lease or an operating lease. To determine if a lease is a capital lease, we evaluate if the following conditions exist: a) ownership is transferred to the lessee by the end of the lease term, b) there is a bargain purchase option, c) the lease term is at least 75% of the property’s estimated remaining economic life or d) the present value of the minimum lease payments at the beginning of the lease term is 90% or more of the fair value of the leased property to the lessor at the inception date. A capital lease is accounted for as if there was an acquisition of an asset and an incurrence of an obligation at the inception of the lease. We account for all other leases as operating leases. In March 2013, we entered into a sale-leaseback agreement with CMB Leasing Co., Ltd. to sell and lease back equipment. For details of the transaction, see Note 14 “Commitments and Contingencies” in the Notes to Condensed Consolidated Financial Statements.

Results of Operations

In 2013, we intend to continue to focus on the implementation of our strategic plan to sustain the growth we have experienced since becoming a U.S. public company in 2006. Over the next 12 months, we expect to continue to expand our distribution channel and develop new markets. Through our aggressive marketing campaign, we also expect to increase our brand awareness and customer loyalty. We also intend to further streamline our supply chain management to further improve and expand our unified, safe and efficient cold-chain logistics system. We also have invested in employee training and development to help sustain our rapid and healthy growth while maintaining a satisfactory profit margin.

In 2013, we expect that the demand for pork in China and the results of the pork and pork products segment of our business will remain strong while live hog prices will remain at current levels, compared with 2012. We anticipate that our profit margin in 2013 will decrease due to increased competition in the industry, the expected increase in labor cost and overheads, and the expected increase in quality assurance and control cost in response to increased importance on food safety placed by the government and consumers.

Comparison of Three Months Ended March 31, 2013 and 2012

Revenue. Total revenue increased from $374.1 million for the three months ended March 31, 2012 to $382.4 million for the three months ended March 31, 2013, which represented an increase of $8.3 million, or approximately 2%. The increase in revenues was primarily due to increased sales volume in our meat and meat products segment resulting from the effects of the continuing increases in the number of our retail outlets, geographic expansion of our distribution network and processing facilities, and increased sales to chain restaurants, food service providers, and wholesalers and distributors in China since the second quarter of 2012, which was partially offset by the decreased average selling price of our pork products resulting from market fluctuations and industry competition during the first quarter of 2013. The following table presents certain information regarding our sales by product division for the three months ended March 31, 2013 and 2012.

	Sales by Division (unaudited)
	Three Months Ended March 31, 2013						Three Months Ended March 31, 2012
	Metric Tons		Sales Revenues (in millions)		Average Price/ Metric Ton		Metric Tons		Sales Revenues (in millions)		Average Price/ Metric Ton
Pork and Pork Products
Chilled pork		92,349	$	243.1	$	2,632		87,146	$	248.8	$	2,855
Frozen pork		25,282		58.6		2,318		25,523		67.0		2,625
Prepared pork products		30,657		78.4		2,557		21,426		55.7		2,600
Vegetables and Fruits		2,498		2.3		921		2,906		2.6		895
Total		150,786	$	382.4	$	2,536		137,001	$	374.1	$	2,731

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The pork market in China is highly fragmented and in the markets where we sell our products, no single supplier has a significant impact on the market price of pork or pork products. We have been pricing our products based on the value of our brand, the quality of our products, hog prices in the applicable period and pricing trends for similar products in the regions in which we operate.

In the first quarter of 2013, we decreased our sales of chilled pork products by approximately $5.7 million over the amount of our sales of such products in the first quarter of 2012. As shown in the table above, our average price during the first quarter of 2013 was approximately $2,632 per metric ton for chilled pork, compared to $2,855 during the first quarter of 2012, a decrease of 8%. The number of metric tons of chilled pork sold during the first quarter of 2013 increased by 5,203, or 6% from the first quarter of 2012. Our total revenue decreased primarily due to the decrease in the average selling prices of our chilled pork products as a result of fluctuations in the market price of pork or pork-related products which was partially offset by our increased volume of sales.

In the first quarter of 2013, we decreased our sales of frozen pork products by approximately $8.4 million over the amount of our sales of such products in the first quarter of 2012. Our average price during the first quarter of 2013 was approximately $2,318 per metric ton for frozen pork compared to $2,625 during the first quarter of 2012, a decrease of 12%. The number of metric tons of frozen pork sold during the first quarter of 2013 decreased by 241, or 1% from the first quarter of 2012. The sales volume decreased in the first quarter of 2013 due to our strategic adjustment of our product mix towards selling less frozen pork products which have a lower profit margin. The average selling prices of our frozen pork products decreased due to fluctuations in the market price of pork or pork-related products.

In the first quarter of 2013, we increased our sales of prepared pork products by approximately $22.7 million over the amount of our sales of such products in the first quarter of 2012. Our average price during the first quarter of 2013 was approximately $2,557 per metric ton for prepared pork products compared to $2,600 during the first quarter of 2012, a decrease of 2%. The number of metric tons of prepared pork products sold during the first quarter of 2013 increased by 9,231, or 43% from the first quarter of 2012. This product division is becoming more important to our business as customers increasingly demand prepared pork products for their convenience and flavor. We plan to gradually increase sales from prepared pork products by building our brand recognition and expanding our capacities for this division.

The sales of meat and vegetable products are closely related to the particular regional markets in which our distribution channels are located. Therefore, the increase in metric tons sold for the first quarter of 2013 was partly attributable to our efforts to expand our distribution channels. The following table shows the changes in our distribution channels:

	Numbers of Stores and Cities Generating Sales Volume (unaudited)
	March 31,				Net			Percentage
	2013		2012		Change			of Change
Showcase stores		152		161		(9	)		(6	)%
Branded stores		1,497		1,329		168			13	%
Supermarket counters		1,853		1,948		(95	)		(5	)%
Total		3,502		3,438		64			2	%
First-tier cities		29		29		—			—
Second-tier cities		137		134		3			2	%
Third-tier cities		439		435		4			1	%
Total		605		598		7			1	%

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The expansion in our distribution channels and geographical coverage has been a significant factor in the increase in our sales volume. The following table shows our revenues by distribution channel for the first quarter of 2013 and 2012, respectively.

	Sales by Distribution Channel (in millions) (unaudited)
	March 31,				Net			Percentage
	2013		2012		Change			of Change
Retail channels	$	115.3	$	117.0	$	(1.7	)		(1	)%
Wholesalers and distributors		157.2		153.7		3.5			2	%
Restaurants and food services		104.6		96.1		8.5			9	%
Import and export		5.3		7.3		(2.0	)		(27	)%
Total	$	382.4	$	374.1	$	8.3			2	%

The increase in sales to different distribution channels was mainly due to the following factors:

· we have built our brand image and brand recognition through general advertising, display promotions and sales campaigns;

· we have increased the number of stores and other channels through which we sell our products; and

· we believe consumers are placing more importance on food safety considerations and are willing to pay higher prices for safe food products.

Cost of Sales. Our cost of sales primarily includes our costs of raw materials, labor costs, and overhead. Of our total cost of sales, our cost of raw materials typically accounts for approximately 95.5% to 95.8%, our overhead typically accounts for 2.7% to 2.8% and our labor costs typically account for 1.5% to 1.7%, with slight variations from period to period. All of our meat products are derived from the same raw materials, which are live hogs. Our vegetable and fruit products are purchased from farms located close to our processing facility in Changge City, Henan province. As a result, the purchasing costs of live hogs and vegetables and fruits represent substantially all of our costs of raw materials. The increase in our cost of sales was consistent with but considerably lower than our increase in sales revenue.

	Cost of Sales by Division (unaudited)
	Three Months Ended March 31, 2013						Three Months Ended March 31, 2012
	Metric Tons		Cost of Sales (in millions)		Average Cost/ Metric Ton		Metric Tons		Cost of Sales (in millions)		Average Cost/ Metric Ton
Pork and Pork Products
Chilled pork		92,349	$	221.3	$	2,396		87,146	$	227.1	$	2,606
Frozen pork		25,282		54.8		2,168		25,523		62.8		2,461
Prepared pork products		30,657		65.8		2,146		21,426		46.5		2,170
Vegetables and Fruits		2,498		2.0		801		2,906		2.3		791
Total		150,786	$	343.9	$	2,281		137,001	$	338.7	$	2,472

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Our gross profit margin (gross profit divided by sales revenue) increased from 9.5% for the three months ended March 31, 2012 to 10.1% for the three months ended March 31, 2013. The increase in our gross margin during the first quarter of 2013 was primarily due to (i) higher percentage of revenue from prepared pork products, which contribute a higher margin than other products, and (ii) the increase in the gap between pork prices over hog prices, which is the bulk of our cost of sales.

General and Administrative Expenses. General and administrative expenses increased from $9.4 million for the three months ended March 31, 2012 to $11.1 million for the three months ended March 31, 2013 which represented an increase of $1.7 million, or approximately 18%. As a percentage of revenues, general and administrative expenses increased from 2.5% for the three months ended March 31, 2012 to 2.9% for the three months ended March 31, 2013.

The increase in general and administrative expenses during the three months ended March 31, 2013 was primarily the result of a $0.2 million increase in bad debt provision due to the increased account receivable balance on March 31, 2013, a $0.3 million increase in salary expenses because the average salary we paid to our employees increased, and a $0.7 million increase in administrative expenses primarily due to higher expenses related to the going private transaction.

Selling Expenses. Selling expenses increased from $6.4 million for the three months ended March 31, 2012 to $8.7 million for the three months ended March 31, 2013, which represented an increase of $2.3 million, or approximately 34%. The increase in selling expenses was primarily the result of our increased sales of pork and pork products and was primarily due to a $0.3 million increase in salary expenses because the average salary we paid to our employees increased, a $0.8 million increase in promotion expenses for increasing promotional activities to compete more effectively in the industry, and a $0.6 million increase in super market management fees. As a percentage of revenue, selling expenses increased from 1.7% for the three months ended March 31, 2012 to 2.3% for the three months ended March 31, 2013.

Interest Expense (net of interest income). Interest expense increased from $7.6 million for the three months ended March 31, 2012 to $8.3 million for the three months ended March 31, 2013, which represented an increase of $0.7 million, or approximately 9%. The increase in interest expense net of interest income was primarily due to higher average outstanding loan balances in the three months ended March 31, 2013 compared to three months ended March 31, 2012.

Other Income and Government Subsidies. Other income and government subsidies decreased from $1.5 million for the three months ended March 31, 2012 to $1.2 million for the three months ended March 31, 2013,which represented a decrease of $0.3 million, or approximately 20%. The decrease was primarily due to a $0.2 million decrease in other income and a $0.1 million decrease in government subsidies.

Income Taxes. The enterprise tax rate in China on income generated from the sale of prepared products is 25% and there is no income tax on income generated from the sale of raw products, including raw meat products and raw vegetable and fruit products. The decrease of $0.4 million in the provision for income taxes for the three months ended March 31, 2013 over the three months ended March 31, 2012 resulted from the increased sales of prepared meat products at lower gross profit margins.

Segment Information

Under generally accepted accounting principles in the United States, we operate in only one segment: meat production.  Our vegetable and fruit operations, both financially and operationally, do not represent a significant enough portion of our business to constitute a separate segment.  However, our product lines have been divided into two divisions: pork and pork products, and vegetables and fruits.

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Our pork and pork products division is involved primarily in the processing of live hogs into fresh, frozen and processed pork products. Our pork and pork products division markets its products domestically to our retail stores, food retailers, food service distributors, restaurant operators and noncommercial food service establishments, such as schools, hotel chains, healthcare facilities, the military and other food processors, as well as to international markets on a limited basis.

Our vegetables and fruits division is involved primarily in the processing of fresh vegetables and fruits. We contract with more than 100 farms in Henan province and nearby areas to produce high-quality vegetable varieties and fruits suitable for export. The proximity of the contracted farms to our operations ensures freshness from harvest to processing. We contract to grow more than 25 categories of vegetables and fruits, including asparagus, sweet corn, broccoli, mushrooms, lima beans, strawberries and capsicum.

The following tables show our sales in metric tons and production processed in metric tons by division for the three months ended March 31, 2013 and 2012 and the percentage increases for each division between periods.

	Sales by Division (in metric tons)
	Three Months Ended March 31,
	2013		2012		Net Change 2013/2012			% Change 2013/2012
	(Unaudited)		(Unaudited)
Pork and Pork Products
Chilled pork		92,349		87,146		5,203			6	%
Frozen pork		25,282		25,523		(241	)		(1	)%
Prepared pork products		30,657		21,426		9,231			43	%
Vegetables and Fruits		2,498		2,906		(408	)		(14	)%
Total		150,786		137,001		13,785			10	%

	Production by Division (in metric tons)
	Three Months Ended March 31,
	2013		2012		Net Change 2013/2012			% Change 2013/2012
	(Unaudited)		(Unaudited)
Pork and Pork Products
Chilled pork		93,104		87,787		5,317			6	%
Frozen pork		28,329		33,016		(4,687	)		(14	)%
Prepared pork products		29,753		22,938		6,815			30	%
Vegetables and Fruits		2,308		2,493		(185	)		(7	)%
Total		153,494		146,234		7,260			5	%

Additional Operating Data

In assessing our existing operations and planning our future growth and the development of our business, management considers, among other factors, our revenue growth and growth in sales volume by market segment, as well as our sales by distribution channel and geographic market coverage.

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The following table sets forth information with respect to the number of products we offered, the number of stores in our retail network and the number of provinces and cities in China in which we offered and sold our products as of March 31, 2013 and December 31, 2012, 2011 and 2010.

			December 31,
	March 31, 2013		2012		2011		2010
Number of products		441		441		439		429
Number of retail outlets		3,502		3,490		3,428		3,326
Expansion of Market Coverage
Number of provinces		24		24		24		24
Number of first-tier cities		29		29		29		29
Number of second-tier cities		137		136		134		130
Number of third-tier cities		439		438		432		421

Liquidity and Capital Resources

As of March 31, 2013 and December 31, 2012, we had cash and cash equivalents of $294.3 million and $176.4 million, respectively. As of March 31, 2013, our working capital was approximately $31.6 million.

We have established and implemented corporate policies to manage our cash flows generated by our operating activities. We have established strict credit policies to manage the credit we give to our customers, and we give different credit terms to different types of customers in different sales channels. For supermarket customers, the credit terms are generally four to eight weeks. For showcase stores and branded stores, the credit terms are generally cash sales within one week. For food distributors, the credit terms are generally two to four weeks. For restaurants and food service customers, the credit terms are four to eight weeks. These credit terms are subject to negotiation if requested by our customers, and credit limits vary depending on the credit worthiness and sales volume of the individual customers, which may be increased at times to accommodate for deteriorating economic circumstances. Any adjustment must be approved and credit limits are frequently reviewed by designated management. In general, we ask for credit terms from our suppliers. We generally pay for the hogs we purchase within one week after the hogs pass our health and quality examinations.

For the three months ended March 31, 2013, net cash used in operating activities was $16.6 million, which represented an increase of $12.9 million as compared to the net cash used in operating activities of $3.7 million for the same period of 2012. Of the $12.9 million increase, net income accounted for $1.6 million, changes in operating assets and liabilities accounted for $11.6 million. Of the non-cash items, depreciation and amortization accounted for $0.5 million of the change due to the fact that more plant, equipment and machinery were put into use, and provision for bad debts accounted for $0.2 million of the change due to the increased balance of accounts receivable at March 31, 2013 compared to March 31, 2012.

Cash outflow from changes in operating assets and liabilities increased by approximately $11.6 million, as compared to the changes in operating assets and liabilities of $23.9 million for the same period of the prior year. Of the $11.6 million increase in cash outflow, $27.1 million was attributable to the change in accounts payable and $5.7 million was attributable to the change in accounts receivable. The increase was offset by decrease in cash outflow from inventory of $16.7 million and VAT receivable of $4.6 million.

Net cash used in investing activities was $7.7 million for the three months ended March 31, 2013, which represented a decrease of $16.9 million as compared to the net cash of $24.6 million used in investing activities for the same period of the prior year. We spent $10.6 million less on deposits for land use rights and $6.0 million less on construction in progress.

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Net cash provided by financing activities was $141.4 million during the three months ended March 31, 2013, an increase of $88.7 million compared to the net cash provided by financing activities of $52.7 million for the same period of the prior year. We received $95.2 million more in net proceeds from issuing short-term financial bonds, $26.3 million more in net proceeds from long-term bank loans net of repayment, and $29.6 million more in proceeds from a sales-leaseback transaction during the three months ended March 31, 2013. We received $21.7 million less in net proceeds from short-term bank loans net of repayment, and $49.3 million less in net proceeds from bank notes.

Capital Commitment

Capital Expenditure. See Note 6 “Construction in Progress” in the Notes to Condensed Consolidated Financial Statements for description of ongoing construction projects and estimated cost to complete.

Loans. As of March 31, 2013, Henan Zhongpin had short-term and long-term bank and government loans in the aggregate amount of $435.5 million with interest rates ranging from 5.76 % to 7.21% per annum, as follows.

Bank	Amount Borrowed		Interest Rate			Maturity Date
Short-term Loans
SDIC Trust		25,522,819		6.00	%	09/28/2013
China Everbright Bank		4,785,529		6.63	%	06/13/2013
		7,975,881		6.30	%	11/08/2013
		4,785,529		6.30	%	01/05/2014
		3,190,352		6.30	%	01/30/2014
China Construction Bank		7,975,881		6.00	%	07/30/2013
		6,380,704		6.00	%	11/19/2013
		7,975,881		6.00	%	01/15/2014
Agriculture Development Bank of China		967,917		6.00	%	07/02/2013
		4,913,781		6.00	%	06/28/2013
		4,785,529		6.00	%	12/18/2013
		11,166,233		6.00	%	12/19/2013
Agriculture Bank of China		7,975,881		6.00	%	02/26/2014
China Minsheng Bank		6,380,705		6.30	%	05/17/2013
		6,380,705		6.30	%	08/09/2013
		6,380,705		6.30	%	08/17/2013
		6,380,705		6.30	%	08/24/2013
China Merchants Bank		3,190,352		6.30	%	09/16/2013
		4,785,529		6.30	%	11/21/2013
		1,595,176		6.30	%	01/10/2014
		9,571,056		6.30	%	01/25/2014
		4,785,529		6.60	%	03/10/2014
		3,190,352		6.00	%	03/29/2014
China CITIC Bank		4,785,529		6.60	%	07/20/2013
		1,595,176		6.60	%	07/25/2013
		4,785,529		6.60	%	09/28/2013
		4,785,529		6.60	%	11/22/2013

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Bank of Xuchang		3,190,352	6.00	%	06/12/2013
Industrial Bank		3,190,352	7.20	%	04/01/2013
		7,975,881	6.31	%	06/11/2013
		7,975,881	6.00	%	08/13/2013
Huaxia Bank		12,761,409	6.00	%	06/25/2013
Rabobank Nederland		7,975,881	5.88	%	05/07/2013
Bank of Shanghai		6,380,705	6.00	%	11/29/2013
HSBC		9,571,057	6.00	%	12/05/2013
CIBC		7,975,881	6.60	%	10/31/2013
Pingan Bank		12,761,409	6.30	%	02/04/2014
City Finance – short-term		31,903	0.00	%	Extendable
Total	$	246,785,205
Long-term Loan - Current portion
Agriculture Bank of China		319,036	6.40	%	05/27/2013
		2,392,764	6.40	%	12/27/2013
		9,571,057	6.40	%	05/30/2013
		797,588	6.46	%	06/30/2013
		797,588	6.46	%	12/31/2013
		1,595,176	7.04	%	01/07/2014
China Merchants Bank		4,785,529	6.40	%	11/26/2013
China Development Bank		1,754,694	7.21	%	04/19/2013
		1,754,694	7.21	%	11/20/2013
China Construction Bank		4,785,529	6.08	%	06/21/2013
		6,380,704	5.76	%	06/29/2013
		7,975,881	6.65	%	03/25/2014
		2,392,764	6.65	%	03/25/2014
Total	$	45,303,004
Long-term Loans
Agriculture Bank of China		159,517	6.40	%	06/27/2014
		797,588	6.40	%	06/30/2014
		7,178,293	6.40	%	12/27/2014
		7,975,881	6.40	%	05/30/2015
		7,975,881	6.40	%	07/11/2015
		11,006,716	6.40	%	12/27/2014
		11,166,234	6.40	%	03/21/2016
		3,190,352	7.04	%	07/07/2014
		12,761,410	6.40	%	11/28/2014
		797,588	6.40	%	12/31/2014
		797,588	6.40	%	06/30/2015
		797,588	6.40	%	12/31/2015
		3,190,352	7.04	%	07/01/2015
		3,987,940	7.04	%	07/07/2015
		3,987,940	7.04	%	01/07/2016
		3,987,940	7.04	%	07/07/2016
		3,987,940	7.04	%	01/07/2017
		2,233,247	7.04	%	07/07/2017

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China Development Bank		2,073,729	7.21	%	05/20/2014
		2,073,729	7.21	%	11/20/2014
		2,392,764	7.21	%	05/20/2015
		2,392,764	7.21	%	11/20/2015
		2,711,800	7.21	%	05/20/2016
		2,711,800	7.21	%	11/20/2016
		3,030,835	7.21	%	05/20/2017
		3,030,835	7.21	%	11/20/2017
		3,349,870	7.21	%	05/20/2018
		3,349,870	7.21	%	11/20/2018
		3,668,906	7.21	%	05/20/2019
		3,668,906	7.21	%	11/20/2019
		3,987,940	7.21	%	05/20/2020
		3,987,940	7.21	%	11/20/2022
		638,070	7.21	%	05/20/2021
		638,070	7.21	%	11/20/2021
		638,070	7.21	%	05/20/2022
China Merchants Bank		7,178,293	6.40	%	11/26/2014
China Construction Bank		3,190,353	6.15	%	03/26/2015
Changge Old Town		1,627,849	7.00	%	Extendable
Canadian Government Transfer Loan		1,052,087	*		05/31/2042
Total	$	143,374,475

* The principal amount of this loan is interest free.

Of our outstanding short-term loans as of March 31, 2013, $8.0 million aggregate principal amount of loans were secured by our subsidiaries in China, $111.2 million aggregate principal amount of loans was credit loans, and $14.4 million aggregate principal amount of loans was guaranteed by Henan Huanghe Enterprises Group Co., Ltd., a group corporation that is not affiliated with our company or with any of our subsidiaries (“Huanghe Group”).

Of our long-term loans outstanding at March 31, 2013, $126,178,436 are secured by land use rights and property, plant and equipment of our subsidiaries. The total amount of land use rights and property, plant and equipment pledged was $191,620,720 at March 31, 2013.

In May 2012, Henan Zhongpin entered into a mutual guarantee agreement with Huanghe Group. Under the agreement, Henan Zhongpin agreed to guarantee bank loans of Huanghe Group in an amount up to $23.9 million and Huanghe Group agreed to guarantee Henan Zhongpin’s bank loans in an amount up to $23.9 million. The agreement will expire in May 2013. At the expiration of the agreement, each party will remain obligated under its guarantee for any loans of the other party that are outstanding on the date of expiration of the agreement. At March 31, 2013, Henan Zhongpin had outstanding guarantees for $19.7 million of Huanghe Group’s bank loans under the agreement. All of the bank loans guaranteed by Henan Zhongpin will mature within the next 12 months.

In March 2013, Henan Zhongpin issued RMB600 million (approximately US$95.7 million) aggregate principal amount of 5.15% unsecured one-year bonds which will mature on March 27, 2014, solely to PRC institutional investors. We issued short-term financial bonds because the cost of bonds is lower than short-term loans we borrowed from banks, so that we can repay some of these short-term loans with proceeds from short-term financial bonds. In addition, we may issue more bonds in the future if we need more lower-cost finance resources.

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We believe our existing cash and cash equivalents, together with our ability to secure bank borrowings, will be sufficient to finance our investment in new facilities, with budgeted capital expenditures of approximately $103.5 million over the next 12 months, and to satisfy our working capital needs. We intend to satisfy our short-term debt obligations that mature over the next 12 months through additional short-term bank loans, in most cases by rolling the maturing loans into new short-term loans with the same lenders as we have done in the past.

Contractual Obligations

For information on our contractual obligations, please refer to Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources and Capital Commitment - Contractual Commitments.” as presented in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

Off-Balance Sheet Arrangements

We do not have off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Inflation and Seasonality

While demand for our products in general is relatively high before the Chinese New Year in January or February each year and lower thereafter, we do not believe our operations have been materially affected by seasonality. In addition, certain components of our operations, such as revenue and cost of sales, have partially increased due to inflation; however, we do not believe that our overall results of operations have been materially affected by inflation.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Disclosures About Market Risk. We may be exposed to changes in financial market conditions in the normal course of business. Market risk generally represents the risk that losses may occur as a result of movements in interest rates and equity prices. We currently do not use financial instruments in the normal course of business that are subject to changes in financial market conditions.

Currency Fluctuations and Foreign Currency Risk. Substantially all of our operations are conducted in China, with the exception of our export business and limited overseas purchases of raw materials. Most of our sales and purchases are conducted within China in RMB, which is the official currency of China. As a result, the effect of the fluctuations of exchange rates is considered minimal to our business operations.

Substantially all of our revenues and expenses are denominated in RMB. However, we use the U.S. dollar for financial reporting purposes. Conversion of RMB into foreign currencies is regulated by the People’s Bank of China through a unified floating exchange rate system. Although the PRC government has stated its intention to support the value of RMB, there can be no assurance that such exchange rate will not again become volatile or that RMB will not devalue significantly against the U.S. dollar. Exchange rate fluctuations may adversely affect the value, in U.S. dollar terms, of our net assets and income derived from our operations in China.

Interest Rate Risk. We are exposed to interest rate risk through our short-term and long-term loans. We have $246.8 million short-term bank loans and $188.7 million long-term bank loans outstanding as of March 31, 2013, and we have not used any derivative financial instruments or engaged in any interest rate hedging activities to manage our interest rate risk exposure. Our future interest expense on short-term or long-term bank loans may increase or decrease due to changes in market interest rates. We monitor interest rates in conjunction with our cash requirements to determine the appropriate level of bank loans relative to other sources of funds.

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Credit Risk. We have not experienced significant credit risk, as most of our customers are long-term customers with superior payment records. Our receivables are monitored regularly by our credit managers. No single customer or supplier constitute more than 5% of our consolidated sales revenue for the three months ended March 31, 2013 and 2012.

Item 4.  Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, our chief executive officer and chief financial officer concluded that, as of the end of such period, our disclosure controls and procedures were effective to ensure that information that we are required to disclose in reports that we file or submit under the Exchange Act was recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and accumulated and communicated to our management, including our chief executive officer and chief financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II – Other Information

Item 1. Legal Proceedings

On March 27, 2012, we announced that our Board of Directors had received a preliminary, non-binding proposal from our Chairman and Chief Executive Officer, Xianfu Zhu, stating that Mr. Zhu intended to seek to purchase the remaining shares of our company that he does not presently own (the “Proposed Buyout”). Following this announcement, at least three lawsuits have been filed in Delaware naming the members of our Board of Directors and/or us as defendants. On November 26, 2012, we announced that we had entered into a definitive merger agreement with Golden Bridge Holdings Limited, a Cayman Islands exempted company ("Parent"), Golden Bridge Merger Sub Limited, a Delaware corporation and wholly owned subsidiary of Parent ("Merger Sub") and Mr. Xianfu Zhu, which was subsequently amended and restated on February 8, 2013 (the “Merger Agreement”). Pursuant to the Merger Agreement and subject to the satisfaction or waiver of the conditions to the transactions contemplated thereby, at the effective time of the merger, each share of our common stock issued and outstanding immediately prior to the effective time (other than shares owned by (i) Parent or Merger Sub, (ii) Mr. Xianfu Zhu, Mr. Baoke Ben, Mr. Chaoyang Liu, Mr. Qinghe Wang, Mr. Shuichi Si and Ms. Juanjuan Wang, (iii) our company or any direct or indirect wholly-owned subsidiary of us or (iv) stockholders who have properly exercised and perfected appraisal rights under Delaware law), will be converted automatically into the right to receive $13.50 in cash, without interest. On March 15, 2013, we filed with the SEC a Schedule 13e-3 relating to the Proposed Buyout together with a preliminary proxy statement relating to a special meeting of stockholders to adopt the Merger Agreement (collectively, and together with all filings with the SEC that are ancillary thereto, and all amendments and supplements thereof, the “Transaction Filings”).

Following the November 2012 announcement of the Merger Agreement, two additional lawsuits were filed in Delaware naming as defendants the members of our Board of Directors, us, Parent, and Merger Sub. It is possible that more lawsuits will occur. The resolution of any of these lawsuits, claims or legal proceedings could materially and adversely affect our business, results of operations and financial position. The terms and conditions of applicable bylaws, certificates or articles of incorporation, agreements or applicable law may obligate us to indemnify our directors, officers or employees with respect to certain of the matters described below.

On April 3, 2012, a verified shareholder class action lawsuit was filed by Phillip Meeks in the Court of Chancery of the State of Delaware against us and members of our Board of Directors, alleging that, inter alia, our Board of Directors breached their fiduciary duties in connection with the Proposed Buyout, and that the price per share proposed by Mr. Zhu represented inadequate consideration in light of our company’s intrinsic value and future prospects, and that we aided and abetted the breach of fiduciary duties. The plaintiff seeks damages, declaratory relief and injunctive relief, including an order preventing us from proceeding with the Proposed Buyout or any transaction with Mr. Zhu, as well as an award of plaintiffs’ attorneys’ fees and costs. We believe that none of the defendants has yet responded to the complaint.

On April 11, 2012, a verified shareholder class action lawsuit was filed by Richard Bauschard in the Court of Chancery of the State of Delaware against members of our Board of Directors, alleging that, inter alia, our Board of Directors breached their fiduciary duties in connection with the Proposed Buyout, and that the price per share proposed by Mr. Zhu represented inadequate consideration in light of our company’s intrinsic value and future prospects. The plaintiff seeks damages, declaratory relief and injunctive relief, including an order preventing the defendants from proceeding with the Proposed Buyout or any transaction with Mr. Zhu, as well as an award of plaintiffs’ attorneys’ fees and costs. On April 12, 2013, plaintiff Richard Bauschard filed an amended complaint. The amended complaint names the same defendants and includes the same cause of action alleging breach of fiduciary duties, but the amended complaint includes additional allegations relating to the terms of the Merger Agreement and the disclosures contained in the preliminary proxy statement filed by us on March 15, 2013 with the SEC. We believe that none of the defendants has yet responded to the complaint.

39

On April 18, 2012, a verified shareholder class action lawsuit was filed by Harry Vonderlieth in the Court of Chancery of the State of Delaware against us and members of our Board of Directors, alleging that, inter alia, our Board of Directors breached their fiduciary duties to our shareholders in connection with the Proposed Buyout, and that the price per share proposed by Mr. Zhu represented inadequate consideration in light of our company’s intrinsic value and future prospects, and that we aided and abetted the breach of fiduciary duties. The plaintiff seeks damages, declaratory relief and injunctive relief, including an order preventing us from proceeding with the Proposed Buyout or any transaction with Mr. Zhu, as well as an award of plaintiffs’ attorneys’ fees and costs. We believe that none of the defendants has yet responded to the complaint. On May 2, 2013, plaintiff Harry Vonderlieth voluntarily dismissed this case and the Court of Chancery of the State of Delaware granted the dismissal on May 3, 2013.

On December 4, 2012, after the announcement of our entering into the Merger Agreement, a verified shareholder class action lawsuit was filed by Ernesto Rodriguez in the Court of Chancery of the State of Delaware against us and members of our Board of Directors, Parent and Merger Sub, alleging that, inter alia, our Board of Directors breached their fiduciary duties to our shareholders in connection with the Proposed Buyout and the Merger Agreement, and that the price per share and other terms provided for in the Merger Agreement are inadequate and unfair in light of our company’s intrinsic value and future prospects, and that we, Parent and Merger Sub aided and abetted the breach of fiduciary duties. The plaintiff seeks damages, declaratory relief and injunctive relief, including an order preventing us from proceeding with the Proposed Buyout or any transaction with Mr. Zhu, as well as an award of plaintiffs’ attorneys’ fees and costs. On or about February 6, 2013, the plaintiff served document discovery on the individual defendants. On April 12, 2013, plaintiff Ernesto Rodriguez filed an amended complaint. The amended complaint names the same defendants and includes the same cause of action alleging breach of fiduciary duties, but the amended complaint includes additional allegations relating to the disclosures contained in the preliminary proxy statement filed by us on March 15, 2013 with the SEC. We believe that none of the defendants has yet responded to the complaint or the discovery served by plaintiff.

On April 23, 2013, after the announcement of our entering into the Merger Agreement and certain of the Transaction Filings were made, a verified shareholder class action lawsuit was filed by Alan Hall in the Court of Chancery of the State of Delaware against us and members of our Board of Directors, Parent and Merger Sub, alleging that, inter alia, our Board of Directors breached their fiduciary duties to our shareholders in connection with the Proposed Buyout and the Merger Agreement, and that the price per share and other terms provided for in the Merger Agreement are inadequate and unfair in light of our company’s intrinsic value and future prospects, that the Transaction Filings contain materially misleading misstatements and omissions, and that we, Parent and Merger Sub aided and abetted the breach of fiduciary duties. The plaintiff seeks damages, declaratory relief and injunctive relief, including an order preventing us from proceeding with the Proposed Buyout, or any transaction with Mr. Zhu, as well as an award of plaintiffs’ attorneys’ fees and costs. We believe that none of the defendants has yet responded to the complaint.

On or about April 22, 2013, plaintiff Richard Bauschard filed a motion to consolidate and appoint lead counsel with the Court of Chancery of the State of Delaware, moving the Court for an order providing for (i) the consolidation of the aforesaid lawsuits filed by Phillip Meeks, Richard Bauschard, Harry Vonderlieth and Ernesto Rodriguez, and (ii) the appointment of lead counsel and Delaware liaison counsel in the consolidated matter. We believe that none of the defendants has yet responded to the motion.

We intend to defend against the pending class action litigation vigorously.

For a description of our accounting policy regarding loss contingencies, see Note 14 “Commitments and Contingencies” in the Notes to Condensed Consolidated Financial Statements.  With respect to the legal proceedings and claims described above, such litigation is still in its preliminary stages and the final outcome, including our liability, if any, with respect to such litigation, is uncertain.  In addition, it is not currently possible to determine the maximum potential amount under the indemnification provisions under the terms and conditions of applicable bylaws, certificates or articles of incorporation, agreements or applicable law due to the limited history of prior indemnification claims and the preliminary stages of the litigation.  At present, we are unable to estimate a reasonably possible range of loss, if any, that may result from such litigation. If an unfavorable outcome were to occur in the litigation described above, the impact could be material to our business, financial condition, or results of operations.

40

Item 1A.   Risk Factors

During the three months ended March 31, 2013, there were no material changes to the risk factors disclosed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2012. 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) None.

(b) Not Applicable.

(c) None.

Item 3. Defaults Upon Senior Securities

Not Applicable.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

(a) None.

(b) None.

Item 6. Exhibits

The exhibits required by this item are set forth on the Exhibit Index attached hereto.

41

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, we have duly caused this report to be signed on our behalf by the undersigned thereunto duly authorized.

Zhongpin Inc.
	(Company)
Date:  May 10, 2013
By:	/s/ Xianfu Zhu
	Xianfu Zhu
	Chief Executive Officer
By:	/s/ Feng Wang
	Feng Wang
	Chief Financial Officer

42

Exhibit Index

Exhibit Number	Exhibit Title
10.1*	Financial Leasing Contract dated March 20, 2013 between Henan Zhongpin Food Share Co., Ltd. and CMB Financial Leasing Co., Ltd. (Translated from Mandarin)
31.1*	Certification of our Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of our Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of our Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of our Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase
101.DEF**	XBRL Taxonomy Extension Definition Linkbase
101.LAB**	XBRL Taxonomy Extension Label Linkbase
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase

* Filed herewith

**  Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

43

EX-10.1

Exhibit 10.1 

 

Financial Leasing Contract

Contract Number: CC14HZ1303154551

Lessor:CMB Financial Leasing Co., Ltd.

Lessee: Henan Zhongpin Food Share Co., Ltd.

Ex. 10.1 - 1

Financial Leasing Contract

Contract Number: CC14HZ1303154551

Signing Place: Shanghai

Signing Date: March 20, 2013

Party A: CMB Financial Leasing Co., Ltd.

Address: Suite 9F, Standard Chartered Bank Building, 201

Century Ave, Pudong New District, Shanghai City

Legal Representative: Qingbin Wang

Contact: Yingzhong Cao

Fax: 021 - 6105 9922

Party B: Henan Zhongpin Food Share Co., Ltd.

Address:21 Changge Road, Changge City, Henan Province

Legal Representative - Xianfu Zhu

Contact - Xiaowei Zhu

Postcode - 461500

Under the principle of equality, freewill, integrity, mutual benefit and common development, and by friendly consultations, Party A and Party B agree to reach the following agreement (hereinafter “this agreement” or “this contract” ) to comply with by both, according to contract law and other related laws and regulations in P.R. China:

Part I Special Clauses

I. Leased Equipment ( Unit: RMB Yuan)

The leased equipment is the equipment for processing and slaughtering production lines for prepared pork products.

Details for the leased equipment refer to Appendix One of this contract “ Lease back equipment list”, the term “leased equipment” in this contract refers to the equipment/ assets in Appendix One.

The transfer price for the leased equipment is RMB 274,735,451.41

Location of the leased equipment is the factory in Changge

Payment for the transfer price for the leased equipment : one lump sum

Ex. 10.1 - 2

II. Finance Leasing (Unit RMB Yuan)

Total of the finance leasing: RMB 200,000,000.00

Leasing term: 48 months after the payment of the transfer price of the leased equipment

Nominal annual leasing rate : PBOC 3-5 years, benchmark of bank loans: downward 9%

Commencement date: the payment date of the transfer price of the leased equipment

First payment: RMB74,735,451.41

Nominal equipment price : RMB 1

Commission fees: 3.3% of the total finance leasing value, or RMB 6,600,000

Payment for commission fees: one lump sum

Deposit in total: 4% of the finance leasing value, or RMB 8,000,000

Payment for deposit: one lump sum

Payment method of the rent: equal amount at the end of each period

Rent payment period: quarterly

III. Party A and Party B’ s bank accounts

Party A’s bank account (it is used to receive the rent payment and other payment from Party B)

Account name: CMB Financial Leasing Co., Ltd.

Opening bank: Siping Branch, Shanghai, CMB

Account # : 1219 0659 7510 606

Party B’s bank account (it is used to receive the leased equipment transfer price from Party A and other relevant payments from Party A)

Account name: Henan Zhongpin Food Share Company.

Opening account:21-century Zhengzhou branch, CMB

Account #: 371902006910901

IV. Insurance

Party B should be responsible for the insurance of the leased equipment. Whether Party B buys insurance or not, if there is any damage, risk or losses during the leasing period, Party B will be fully responsible, Party A will not take any responsibilities. The above does not affect any obligations of Party B under this contract (including but not limited to rent payments and other payments) (this clause supersedes article ten of the General Clauses )

Ex. 10.1 - 3

V. Guarantee

Mr. Xianfu Zhu provides irrevocable guarantee for all the liabilities under this contract, and signs the Irrevocable Guarantee Agreement numbered ZLDBGRZX1303154551.

VI. Use of Proceeds

Use of proceeds by Party B: to repay bank loans

Payment method: on Party B’s own discretion

VII. Other Clauses

None.

The special clauses, general clauses and relevant appendix are integral part of this contract, have the same legal effect. (if there are conflicts between special clauses and general clauses, the special clauses shall prevail). Party B confirms it has carefully read and understood all the special clauses, general clauses and relevant appendix, and signs this contract with its own willingness.

Party A: CMB Financial Leasing Co., Ltd.

(corporate seal)

Party B: Henan Zhongpin Food Share Co., Ltd.

Legal representative or authorized representative:

/s/Xianfu Zhu

(corporate seal)

Ex. 10.1 - 4

Part II: General Clause

Article One Definitions

In the agreement, unless there are other prescriptions in context:

1.1 Commence date: During the implementation process of this contract, the time a lessor starts to record rent payment by a lessee.

1.2 Commission charge: The service charge that a lessee pays to a lessor for the finance leasing service they provide in prior period.

1.3 Claim: During the process of contract implementation, for the actual loss made not by their own fault, or resulted from the circumstances of that the opposing party should take responsibility pursuant to law and regulations, one party can ask the other for pecuniary compensation or other liabilities for breach contract.

1.4 Payment date: refer to the time of each payment stated in Appendix Three of this contract “rental payment table”, if the payment date is not a working day, then the payment date should be brought to the next working day

1.5 Financing amount: refer to the actual payment to the leasing party, i.e. equipment leasing payment deducting the first rent payment

1.6 Principal: refer to the balance of the finance leasing payment in this contract

1.7 First rent payment: refer to the payment lessee pays to the lessor on the commencement date,

1.8 Leasing deposit: refer to certain amount of payment by Party B to Party A, for the purpose that Party B takes all the responsibilities as specified in this contract

Article Two Statement and guarantee

2.1 The statement and assurance by Party A

2.1.1 Party A, a non-bank financial institution established and existed complying with the law of People’s Republic of China, has independent legal position and qualification of dealing leaseback operation.

2.1.2 Party A guarantees that it is internally authorized corresponding to the subscription and implementation of the contract.

2.1.3 Party A carefully reads through the contract and all items of the contract appendix, and wholly understood the meaning of each item and its implication that sealed contract authentically express. As to the item of responsibility exemption or restriction under the contract, Party A has reminded Party B to notice in a reasonable way and explained it.

2.2 The statement and assurance by Party B

2.2.1 Party B is a company established and existed according to the law of People’s Republic of China, has independent legal position and the capabilities of civil acts and civil liabilities consistent with the business scope specified in its business license.

Ex. 10.1 - 5

2.2.2 Party B guarantees that the sealed contract has obtained corresponding internal authority and permission of relative management department, and has gone through all necessary procedures according to law.

Party B guarantees to provide Party A with all permission files related to subscription and implementation of the agreement and takes the responsibility for its authenticity, validity and integrity; Party B has the right to sign this contract and appendix within, and other related contract or documents.

2.2.3 Party B guarantees to compile and provide all financial accounting statements and reports on time based on Party A’s requirements, and is responsible for its authenticity, validity and integrity.

2.2.4 Party B promises that the use of the leased equipment is within the business scope of Party B and will not violate any provision of laws and regulations, and projects that related to the leased equipment conformed to the laws and regulations and have obtained the approval of relevant administrative authorities.

2.2.5 Party B reads through all articles of the contract and attachments, and fully comprehended its authentic meanings and connotations of various signed contract files. Party B has certificated the items that exempt or limit Party A’s liability provisions. Party A has adopted a reasonable manner to bring to Party B’s attention and explained accordingly.

2.2.6 Party B agrees Party A to register in the finance lease registration system of Credit Information Center of People's Bank of China after signing this contract.

2.2.7 Party B agrees under this contract, Party A has the right to check the daily operations of Party B through CMB for the purpose of after-rent management, and Party B should provide relevant information.

Article Three Nature of Transaction and leased equipment

3.1 Party A and Party B will conduct a leaseback according to this contract (or agreement). Party A agrees to purchase Party B’s leasing facilities, on which Party B promises that they have the lawful property rights and the equipment is without property flaw, and lease such equipment to Party B for use. Party B agrees to hold a lease and pay rents to Party A based on the agreement.

3.2 The details of the leased equipment are in Appendix One of this agreement: leaseback equipment list. ‘Leased equipment’ appeared in this agreement refers to equipment listed in Appendix One of this agreement: leaseback equipment list.

Article Four The acquisition of leased equipment

4.1 Party B aims at leaseback for use and fund raising, taking the way of sales leaseback to sell leased facility or equipment to Party A; on the basis of the above purposes of Party B, Party A pays the transfer price to buy rented facility which Party B sells to Party A and gets the ownership.

4.2 Party B needs to provide property right certificate and other necessary documents to Party A which proves that the leaseback asset belongs to Party B.

Ex. 10.1 - 6

4.3 Both Party A and Party B conformably agree that Party B sells the leased equipment in Appendix One to Party A according to the specified leasing equipment transfer price and way of payment. Party B should make the first rent payment to Party A as specified in this contract on the commence date. Party A should make the finance leasing payment to Party B (equipment leasing transfer price deducting the first rent payment ), which is regarded that both Party A and Party B fulfill their obligations in this contract, and Party B should provide payment receipt to Party A.

4.4 After the signatures and seals of the agreement, Party A shall be responsible for the fund to buy leased facility, while Party B shall be responsible to deliver property document which stated that leased equipment is owned by Party B, and make the insurance of leased equipment of the contract. Once Party B provides all documents required by Party A, and there is no changes happen to the circumstances prescribed in those documents, those documents remain in force, or B has made reasonable explanations to changes, Party A shall pay the transfer price of the leased equipment to Party B. If Party B does not provide relevant documents within one month after signing this contract, Party A has the right to terminate this contract without paying the leased equipment transfer price, or to sign another new contract with Party B.

4.5 Party B should be responsible for the taxes and all costs occurred owing to transfer of the leased equipment under the contract, and Party B insures that no VAT or business taxes need to be paid by both parties.

4.6 Party B should strictly abide by the use of the leasing equipment payment, as required by this contract, not violating the laws and regulations of P.R.China, People’s bank of China and China Bank Regulatory Commission. Party A has the right to supervise and examine the use of the leasing payment, Party B should provide relevant document sealed copies to Party A.

Article Five Delivery, quality defects and claims of leased equipment

5.1 On the day when Party A pays the transfer price of leased equipment to Party B, the leased equipment that Party B rented back from Party A, shall be deemed that the equipment has delivered over from Party A (lessor) to Party B(lessee) in its good condition, while the ownership of those equipment has been transferred to Party A. Party B should not raise any objection to the leased equipment.

5.2 Events, including but not limited to, delay in delivery, quality defects, and suppliers not fulfilling the warranty obligations, occur to the leased equipment Party B purchases first and then transfers to Party A, Party B shall bring up a claim to suppliers directly.

Article Six Lease term, lease payment, commission charge, lease deposit and other expenses

6.1 The lease period is specified in this contract, starting from the commencement date, the commencement date is the day that Part A pays transfer price of leased equipment to Party B. rental payment is an equal amount for each term and paid after the term, referred to Appendix Two "rental payment schedule."

Lease term is a fixed time range. Within this range, both Parties should not pause, or terminate the lease on the lease equipment.

6.2 After the confirmation of commence date, Party A should send to Party B Appendix Three “rental payment table”, “rental payment table” added payment date for each payment upon the “rental payment schedule”. During the validity term of the contract, Party B should pay rents to Party A strictly according to sum, currency type, time and manner of payment stated in the contract and Appendix Three “rents payment table”. If the rental payment date is a public-holiday, then Party B shall pay the rent of current term on previous working day. Party A shall provide invoice to Party B after receiving the rent of current term from Party B.

Ex. 10.1 - 7

The obligation of Party B to pay rent and all other payables is unconditional, without impact of any reason. Under this contract Party B shall pay all payables in full amount to Party A, without any form of reduction and deduction.

6.3 The renting interest rate and interest rent under this agreement is confirmed in the special clauses. Within the leasing period, if the benchmark loan interest rate adjusts, Party A owns the right to adjust the leasing interest rate with accordant direction and same proportion. When interest rate adjusted, Party A does not need to get consent of Party B in advance, but should give notice to Party B in written form according to Appendix Four "Rent Adjustment Notice". The rents for periods before the date of interest rate adjustment as well as the rent for period involves interest rate adjustment remains unchanged, then from the next leasing period, the rental payment will be collected according to be the adjusted amount, Party B has also agreed to pay the rent to Party A according to the amount, currency, time, and manner of payment prescribed in "rent adjustment notice". "Rent Adjustment Notice" is an integral part of this contract.

As to the unpaid rents by Party B, in case interest rate increases, the rate should be adjusted according to new leasing interest rate. If interest rate falls down, Part B should pay rents according to the original leasing interest rate.

6.4 Before commencement date Party B should pay a lump sum of irrevocable commissions to Party A, Party A provides VAT invoice of the same amount.

6.5 Before commencement date Party B should pay a lump sum of leasing deposit to Party A. During the process Party B implementing contract, if breach of contract occurs, Party A owns the right to use leasing deposit to offset: (1) penalty, (2) other expenses, (3) Unpaid rent. At the same time, Party B shall fill deposit in time in accordance with the notification from Party A. If Party B fails to make up for margin requirements, Party A has the right to use each subsequent rent Party B pays in priority to make up margin. If there is no breach of contract happened during contract implementation term, the deposit will offset rents of last or last several periods.

6.6 Party B agrees to take the bank account opened in one branch of China Merchants Bank (referred to debit bank) as the designated account that Party B receives payments from Party A at transfer price as Party A purchase the asset and Party B pays rents to Party A. Fund in this account should be given priority for rental payment and other payments under this contract.

Party B designate the following bank account to be the appointed account that receives payments from Party A at transfer price as Party A purchase the asset and Party B pays rents. (Hereinafter referred to "Party B Account"):

Party B should deposit rents sum of the period two days before rents payday. Party B shall authorize issuing bank to transfer due rents from the appointed account directly to Party A’s account on the date of payments.

Party A designate the following bank account to be the appointed account that receives payments Party B pays to Party A. (Hereinafter referred to "Party A Account"):

Ex. 10.1 - 8

Prior written notice shall be given to Party B within 5 working days in the event of changes in bank account designated by Party A.

Party A, Party B and debit Bank will sign a "payment authorization agreement" as Appendix Five of this contract.

6.7 The transfer date of the rent transferred from Party B’s Account is regarded as Party B’s pay date.

6.8 If Party B pays rents, leasing commission, leasing deposit and other account payable in advance, it is treated as paid in payable date.

Article Seven The ownership and Exercise Right

7.1 Within the lease term, though Party B does not need to provide VAT invoice, Party A is the only one who has the ownership of the leased assets. And the Party A has the right to take approach on lease equipment in ways that Party A deems appropriate to indicate that ownership of the leasing equipment and rental relations, Party B has the obligation to maintain the clearness and completeness of marks of the leased equipment.

7.2 Within the term of the contract, Party B shall guarantee the ownership and disposition right Party A has on leased equipment, Party B should not have the following acts which harm the ownership and disposition right Party A has on leased equipment:

(1) Modify or move the leased equipment out of storage locations without obtaining the written consent from Party A;

(2) Sublease or otherwise dispose the leased equipment without obtaining the written consent from Party A;

(3) Sold or transfer the leased equipment to a third party;

(4) Set up mortgage, pledge, lien right or other rights on the leased equipment;

(5) Use the leased equipment as an investment or cooperation conditions to establish a company or other organization;

(6) Use the leased equipment as security for proceeding or compensation for debt;

(7) Other actions that harm the rights of Party A.

7.3 Within the lease term, If Party B does not breach the contract; Party A should guarantee the quiet possession of the leased equipment by Party B .

Article Eight The use, maintenance and repair of the leased equipment

8.1 Party B shall assume the obligation to maintain and repair the leased equipment to keep it in a good operational position, and bear the expenses.

8.2 Party B should legally, safely and appropriately use the leased equipment within its business scope in accordance with the equipment’s design purposes, operating manuals and instructions, included but not limited to developing operation specifications, equipped with professional operating personnel holding operating certificates.

Ex. 10.1 - 9

8.3 Party B should build maintenance relationship with manufacturers and service providers, equip with professional maintenance organizations and personnel to conduct routine maintenance, repair and care. Party B cannot stop paying the rent and other payments or terminate this contract for reason of occurrence of dispute with manufacturers and service providers.

8.4 During the process of repair and maintenance to the leased equipment by Party B, if the major components of the leased equipment needs to be changed, Party B should acquire a written approval from Party A, the replaced and added components, devices and services on leased equipment due to repair and maintenance should not involve any third party rights; for repair and maintenance purpose, the replaced and added components, devices and services on the leased equipment automatically become an integral part of the leased equipment, transferred to Party A for free, the rent will not be adjusted thereby.

8.5 Party B should bear all costs and taxes that caused by the leased equipment itself and its setting, storage, use, maintenance, and repair.

8.6 Within the lease term, if the leased equipment results in personal injury or property damage, Party B should be responsible for compensation, and Party A does not bear any liabilities.

8.7 Within the lease term, as for any actions of Party B that might damage the leased asset, Party A owns the right to holdback and asks Party B to take all necessary remedies measure, Party B must take such measure.

8.8 Within the lease term, if the leased facility is out of possession of Party B not due to Party A’s fault, Party B should claim its right actively for getting back the facility. The whole expenses occurred due to claim right should be covered by Party B; and Party B should continually pay the rent and other payments in full amount on time.

8.9 Within the leasing term, Party A reserves the right to check the status of the leased equipment at any time, Party B shall accept, support and cooperate with on-site inspections of the leased equipment carried out by project management personnel of Party A, and shall provide record report on the use, maintenance, and care of the equipment as requested by Party A.

Article Nine The damage or destruction risk of the leased facility and treatment

9.1 The damage or destruction risk of the leased property, whether it belongs to insurance, or is not within the insurance coverage, Party B shall be responsible to arrange for repairs and pay the resulting costs, and it has no influence on Party B’s obligation of rents and other obligations.

9.2 Once the damage or destruction of leased asset occurs, Party B should inform Party A in written notice immediately. Party A can choose one of the following methods. Party B is in charge to deal with it and cover all expenses.

9.2.1 Recover or repair the leased equipment to normal condition for use;

9.2.2 Replace the alternatives that have the same condition with the leased equipment.

9.3 If the damage or destruction degree of the leased equipment is unrecoverable and irreplaceable, Party A is entitled to terminate the contract in advance.

Ex. 10.1 - 10

At this point, Party B should pay all due and outstanding rent and other payments, after the above amount is paid, the ownership of the residual value of the leased equipment is transferred to Party B.

Article Ten Insurance

10.1 From the effective date of the contract, based on the amount not less than the net book value of the leased equipment from the commencement date, Party B as insurance applicant, shall insure all risks on leased facility, to take Party A as the first beneficiary and keep it valid during the contract term, with insurance charge covered by Party B. Party B should provide original or photocopy of insurance policies/insurance endorsement for Party A’s custody. The insurance company should be acknowledged by Party A. Party B shall buy appropriate insurance as required by national laws, policies or industry practices at its own costs.

Party B should renew all of the above insurance within the 10 days before the expiration of the insurance policies or insurance contract, and Party B should provide the original version or copy of the renewal insurance policy / insurance endorsement to Party A in time.

If Party B refuses to fulfill its obligations under the terms of the contract, Party A has the right to insure or renew the insurance on his own. The expenses are covered by Party B. Within three working days upon receipt of insurance expense list, Party B should remit the corresponding payments to the Party A Account. If Party B does not pay the insurance fee in time or does not pay in full, Party A is also entitled to collect the liquidated damages by deducting from the rent and the deposit, which will not affect any other claims by Party A against Party B.

10.2 Once the damage or risk events happen, Party B should inform Party A and insurance company immediately on written notice to conduct inspection and claim, and provide all the necessary documents and take all necessary measures to ensure Party A receive insurance reimbursement. In the event of the inspection and claim of determining risks are bungled by Party B’s fault, Party B should be responsible for claim from Party A.

10.3 Party A and Party B should negotiate and arrange the collection and disposal of the insurance fund according to the following principles.

10.3.1 If non-total loss occurred, Party B should use insurance fund to offset expenses, , under the premise of that Party B does not have any default payments to Party A, Party A authorizes Party B to get the insurance, Party B shall use the collected insurance for repair of equipment and continue using it. The contract continues to be valid.

10.3.2 If total loss occurred, Party A has the right to terminate the contract. Party A should use insurance fund based on following order to offset expenses, liquidated damages, compensation, due and undue rents that Party B owes to Party A. The remnant quits insurance should be delivered from Party A to Party B. In case that the remnant is not enough, Party B should make up for Party A.

10.4 Payments delay on insurance compensation cannot be the reason that Party B should postpone payments to Party A. Party B cannot use insurance claim right to offset any payment to Party A.

10.5 If Party B does not purchase insurance or an accident occurs outside the scope of the insurance coverage, which cause damage to or destruction of leasing equipment, action will be executed in accordance with Article nine of this contract.

Ex. 10.1 - 11

Article Eleven Guarantee

11.1 Under the contractor, guarantor provides irrevocable guarantee for Party B, details are in the special clauses.

11.2 Party B holds the responsibility to coordinate Party A and guarantor to sign the guarantee contract and provide relevant documents.

Article Twelve Disposal of the leased equipment after expiration of the lease term

12.1 At the expiration of leased period, both parties agree that Party B will retain the rental facility at nominal price.

12.2 When the rental period expires, Part B has paid all debts on time under the contract (including but not limit to rents, nominal purchase price of leased property and other payables, etc.), the ownership of the leased property transfers to Party B. Party B agreed to purchase leased equipment according to the status quo. Since Party B possesses and uses the leased equipment all along, Party A will not make any statements and assurances on the performance and status of leased equipment.

Party A should cooperate with Party B in handling the transfer procedures of ownership of leased equipment, costs will be borne by Party B.

Article Thirteen The disposition under special circumstances

13.1 In case of that one of the following circumstances happened on Party B, Party A owns the right to require Party B to provide appropriate guarantee within specified period. If Party B cannot provide guarantee within specified period, Party B will be regarded as breach of contract under this contract.

13.1.1 State of operation is deteriorated seriously

13.1.2 Transfer property; withdraw the fund in order to avoid debt;

13.1.3 Lose business credit, e.g. bankruptcy, business operation interruption, lack of business certificate etc.;

13.1.4 Lose or might lose the capability to fulfill debts.

13.2 In case of there are some adverse changes on Party A’s creditor’s rights under the contract, informed by Party A , Party B should provide additional security that satisfies Party A’s requirements. If Party B does not provid security within reasonable period, Party B will be regarded as breach of the contract.

Article Fourteen Notification and assistance

14.1 Party B should carry out the following notification and assistance obligations

Ex. 10.1 - 12

(1) Party B should provide its quarterly financial report and annual auditing report to Party A within 15 working days after these reports are completed.

(2) Party B should bring forth the record reports on the use, maintenance and repair of leased equipment to Party A within 15 days after the end of each fiscal year and should be examined for the operational condition by Party A.

(3) If Party B changes registered capital, location, address, business scope or legal representative that was registered in business management department, Party A should be informed in written notice within seven working days after relevant changes happen.

(4) In case of Party B needs to conduct leasing, contracting operation, joint-stock reform, pool, consolidation, merger, joint venture, separation, capital reduction, changes in equity ownership, transfer of significant assets and other behaviors that is important enough to affect the realization of Party A’s rights and interests. Party B should notify Party A at least thirty working days in advance and obtain Party A’s written approval. Party A has the right to require Party B to take more guarantee approach or pay all outstanding rents and other payments immediately.

(5) In such events that are harmful to the normal operation of Party B or any other events that might place a significantly adverse influence on fulfilling the rental payment obligations under this contract happen, including but not limit to significant economic dispute, litigation, bankruptcy, and financial deterioration, Party B should inform Party A right away.

(6) In the event of that Party B goes out of business, dissolve, shutout and remedy, or business licenses revoked, Party B should inform Party A in written form within five working days after the occurrence.

(7) On the basis of project and contract management requirement, Party A can ask for working assistance of other aspects from Party B. Party B should ratify on that.

(8) Party B also bears the responsibility of notification, assistance and confidentiality under this contract.

14.2 Party B should take the following responsibilities of notification and assistance to Party A

(1). Business location or address change, Party B should notify Party A within 15 working days.

(2) In the event of that Party B goes out of business, dissolve, shutout and remedy, or business licenses revoked, Party B should inform Party A in written form within five working days after the occurrence.

(3) Party B also bears the responsibility of notification, assistance and confidentiality under this contract.

14.3 Whereas any notice given to Party B by the Party A under this contract, if it is through fax or e-mail, once enters into the system of Party B, shall be deemed to have been served; if notice is by EMS post, after the seventh day of delivery, the written notice will be deemed as served.

Ex. 10.1 - 13

Article FifteenLiability for breach of contract

15.1 liability of Party A for breach of contract

15.1.1 If Party B fails to get the possessing and use right because of Party A’s fault, causing the contract cannot be executed and Party B’s damages, Party A shall bear the liability

15.1.2 If as a result of Party A’s excuses, Party B can not exercise its ownership towards the leased facility normally, Party A bears the liability for the loss of Party B.

15.2 liability of Party B for breach of contract

15.2.1 If Party B does not pay leasing commission or provide guarantee based on the contract, Party A can stop the obligations under the contract for a while; if after a month by reminding Party B, if Party B still does not pay over or provide guarantee, Party A has the right to terminate the contract. Party B shall be responsible for the loss caused by contract dissolution.

15.2.2 If Party B fails to pay the matured payable rent, fees, rental deposits and other payables specified in this contract, or fails to pay any fees paid on behalf of Party B by Party A on schedule, Party B shall pay 5/10000 of overdue amounts on a daily basis as liquidated damages to the Party A until the day of payoff.

15.2.3 If Party B breaks the notification and assistance duty in article 14.1 of this contract, but not seriously enough to harm the credit right of Party A, Party B should correct it within 5 days after getting the notice from Party A and take remedy measurement. If Party B refuses to correct or cannot remedy, Party A has the right to request Party B to compensate.

15.2.4 Once one of the following event occurs, Party B is regarded as fundamental breach of contract

(1) Party B fails to pay the rental after 60 days overdue or 90 days cumulatively complying with this contract.

(2) Party B does not provide appropriate guarantee agreed in article 11 of this contract, and still cannot provide within one month after receiving the notice from Party A;

(3) Party B breaks the article 2.2.4 and article 13 of this contract;

(4) In the event of that Party B has some actions detrimental to the ownership of leased facility of Party A or the leased facility itself stated in Article 7.2 and 8.7 under the contract, Party B refuse to correct or cannot remedy after getting the notice from Party A;

(5) If Party B breaks the notification and assistance duty in article 14.1.4, 14.1.5, 14.1.6 of this contract, and harms the credit right of Party A seriously;

(6) Party B does not comply with the use of the funds as required by the contract, and has not taken any remedy within 30 days after notice from Party A.

(7) Any statements, promises or other written statements related to this contract and its appendix that Party B gives to Party A are proved to be misstatement.

(8) Party B fails to carry out or comply with this contract or other promises or obligations in related agreement, has not taken any remedies within 30 days after receiving the written notice from Party A.

Ex. 10.1 - 14

Article Sixteen Remedies for Breach of Contract

16.1 If Party B is considered as anticipatory breach of contract or a fundamental breach of contract, Party A not only has the right to request Party B to be responsible for breach of contract and compensate for the losses in accordance with this contract, but also has the right to take one or more of the following remedies:

(1) recourse from Party B all overdue rental payments, penalty, damages, all outstanding rents and other payables that Party B should pay under this contract;

(2) terminate this contract before expiration, retrieve or prohibit the use of leased equipment by Party B without going through the judicial process, and demand Party B to compensate for all resulting losses;

(3) force Party B to fulfill this contract through legal procedings, and demand Party B to compensate Party A for all losses and expenses resulting from the breach of contract (including legal fees, arbitration fees, lawyer fees and all other costs that occur due to cleanning up, etc.);

(4) take other lawful remedies.Such above measures taken by Party A will not affect other lawful rights of Party A under this contract, and will not affect other obligations borne by Party B under this contract in accordance with law.

16.2 Party A gets back the leasing equipment based on article 16.1, methods including but not limited to:

(1) take measures to make the leased equipment out of operation;

(2) require Party B to deliver the well-leased equipment to Party A in accordance with designated time and place, the relevant costs shall be borne by Party B;

(3) Party A or its agents directly enter into the location of the leased equipment, immediately possess and transfer the leased equipment, the resulting costs shall be borne by Party B.

(4) after retracting the leased equipment, Party A does no need to renovate or repair the leased equipment, and can dispose them directly, designate rating agencies by itself, use evaluated price as the value of the leased equipment, or directly sell the leased equipment in accordance with the status of it when retracted, sale target could be any legal or natural person who needs leased equipment, sales proceeds will be regarded as the value of leased equipment.

16.3 For the proceeds from the disposal of the leased equipment, Party A is entitled to pay in following order:

(1) the full costs arising from the retrieval, transfer, storage, repair, handling of the leased equipment or the implementation of this contract by Party A (including attorneys fees, taxes, etc.);

(2) all penalty, overdue rents, outstanding rents and any loss suffered by Party A shall be paid by Party B;

(3) any other unpaid amounts. If proceeds from the disposal are not enough to compensate for the deficient amount, Party B shall compensate for such deficient amount. If there are proceeds left, it belongs to Party B.

Ex. 10.1 - 15

Article Seventeen Confidential item

Both parties promise to keep relevant business privacy under the contract, if one party fails to fulfill Confidentiality Obligations resulting in the disclosure of the contents of this contract, once the breaching party receives written request from non-breaching party, it should immediately stop any action that violates the contractual obligations, and eliminate any resulting adverse effects by all means. Otherwise, the non-breaching party has the right to take all reasonable means to eliminate these effects, the defaulting party shall compensate the entire losses caused to the opposite party, and bear all arising costs.

Article Eighteen Force Majeure

18.1 If either party cannot make its obligations specified under this contract by force majeure, then it should inform the other party in written notice (no later than 7 days after the force majeure) , explain the details of the force majeure, the losses and relevant documents, and should take relevant necessary remedies to prevent any more losses.

18.2 During the period of force majeure, the Party who is affected can be exempted from the breach of the contract, in part or in all, but it cannot be exempted from its obligations in the contract, including but not limit to rent payments.

18.3 When the force majeure finished, the party who is affected should notify the other party. All parties should continue to meet the obligations specified in this contract and the term of the contract will be extended accordingly.

18.4 If the force majeure continues more than 60 days which seriously affects either party to enforce this contract, then either party has the right to inform the other party in written notice to terminate this contract, and Party B should pay Party A the payments as required in Article 9.3 in this contract.

Article Nineteen The validation, alteration, supplement of the contract and transfer of contractual rights

19.1 The contract includes general terms, special terms and appendix. If general terms and special terms are different, the special terms should be finalized.

19.2 The contract becomes effective once the legal representatives or authorized persons of both Parties seal and sign the contract.

19.3 Once the contract becomes effective, before Party A makes the payment of the leased equipment to Party B, if there is any macro-economy policy change from the Chinese government, which cause material change in Party A’s business scope/size or in the capital market, then Party A has the right to negotiate with Party B. and if no agreement comes out 7 days after the negotiation begins, then Party A has the right to terminate this contract.

19.4 Once the contract becomes effective, if both parties need to modify certain items under the contract or make a complement on unsettled issues, another complement agreement should be made. The supplement agreement constitutes a part of this contract.

Ex. 10.1 - 16

19.5 During the term of contract, Party A is entitled to transfer all or part of its rights under the contract to third party on the condition of that no damage to any contractual rights of Party B.

Article Twenty Governing Law and Disputes Resolution

20.1 This contract is governed and interpreted by PRC laws.

20.2 For any dispute caused by or related to this contract, both parties agree to submit to the People’s Court in Party A’s location.

Article Twenty-one Appendixes to contract

The appendixes are an integral part of the contract, and have the same legal effect as this contract.

Appendix One Leaseback Equipment List

Appendix Two Rental Payment Schedule

Appendix Three Rental Payment Table

Appendix Four Rent Adjustment Notice

Appendix Five CMB Payment Authorization Agreement

Article Twenty-two Supplementary provisions

This contract shall be executed in four counterparts, each of Party A and Party B shall hold two counterparts, all of which shall have the same legal effect.

(The remainder of this page is intentionally left blank)

Ex. 10.1 - 17

The special clauses, general clauses and relevant appendix are integral part of this contract, have the same legal effect. (if there are conflicts between special clauses and general clauses, the special clauses shall prevail). Party B confirms it has carefully read and understood all the special clauses, general clauses and relevant appendix, and signs this contract with its own willingness.

Party A: CMB Financial Leasing Co.,Ltd. 

(corporate seal)

Party B: Henan Zhongpin Food Share Co., Ltd

Legal representative or authorized representative:

/s/Xianfu Zhu 

(corporate seal)

Ex. 10.1 - 18

Appendix Two

Rental Payment Schedule

Finance Leasing contract #: CC14HZ1303154551 Currency: RMB, Unit: Yuan

Payment information

Payment period	principal	interest	tax	total	remarks
Initial installment	74,735,451.41	0.00	0.00	74,735,451.41	First payment, which has been deducted
2	11,190,854.82	2,488,888.89	423,111.11	14,102,854.82
3	11,353,793.67	2,349,624.91	399,436.23	14,102,854.82
4	11,519,104.90	2,208,333.26	375,416.65	14,102,854.82
5	11,686,823.07	2,064,984.40	351,047.35	14,102,854.82
6	11,856,983.21	1,919,548.38	326,323.22	14,102,854.82
7	12,029,620.89	1,771,994.81	301,239.12	14,102,854.82
8	12,204,772.17	1,622,292.86	275,789.79	14,102,854.82
9	12,382,473.65	1,470,411.26	249,969.91	14,102,854.82
10	12,562,762.47	1,316,318.25	223,774.10	14,102,854.82
11	12,745,676.29	1,159,981.65	197,196.88	14,102,854.82
12	12,931,253.34	1,001,368.79	170,232.69	14,102,854.82
13	13,119,532.39	840,446.52	142,875.91	14,102,854.82
14	13,310,552.78	677,181.23	115,220.81	14,102,854.82

Ex. 10.1 - 19

15	13,504,354.43	511,538.79	86,961.59	14,102,854.82
16	13,700,977.83	343,484.61	58,392.38	14,102,854.82
17	13,900,464.09	172,983.53	29,407.20	14,102,854.82	Deposit will be deemed part of the rental payment
Rent in total				300,381,128.53

Party A: CMB Financial Leasing Co., Ltd.

(corporate seal)

Party B: Henan Zhongpin Food Share Co., Ltd.

( corporate seal)

Ex. 10.1 - 20

EX-31.1

Exhibit 31.1

CERTIFICATION

Pursuant to 18 U.S.C. 1350

(Section 302 of the Sarbanes-Oxley Act of 2002)

I, Xianfu Zhu, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of ZHONGPIN INC.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Ex. 31.1

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:      May 10, 2013	By:	/s/ Xianfu Zhu
		Xianfu Zhu
		Chief Executive Officer

Ex. 31.1 

EX-31.2

Exhibit 31.2

CERTIFICATION

Pursuant to 18 U.S.C. 1350

(Section 302 of the Sarbanes-Oxley Act of 2002)

I, Feng Wang, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of ZHONGPIN INC.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Ex. 31.2 

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:     May 10, 2013	By:	/s/ Feng Wang
		Feng Wang
		Chief Financial Officer

Ex. 31.2

EX-32.1

Exhibit 32.1

CERTIFICATION

Pursuant to 18 U.S.C. 1350

(Section 906 of the Sarbanes-Oxley Act of 2002)

In connection with the Quarterly Report on Form 10-Q of ZHONGPIN INC. (the “Company”) for the quarter ended March 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Xianfu Zhu, as Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:      May 10, 2013	By:	/s/ Xianfu Zhu
		Xianfu Zhu
		Chief Executive Officer

This certification accompanies each Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Ex. 32.1

EX-32.2

Exhibit 32.2

CERTIFICATION

Pursuant to 18 U.S.C. 1350

(Section 906 of the Sarbanes-Oxley Act of 2002)

In connection with the Quarterly Report on Form 10-Q of ZHONGPIN INC. (the “Company”) for the quarter ended March 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Feng Wang, as Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:      May 10, 2013	By:	/s/ Feng Wang
		Feng Wang
		Chief Financial Officer

This certification accompanies each Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Ex. 32.2 

XML

CONSTRUCTION IN PROGRESS (Details) (USD $)	3 Months Ended
	Mar. 31, 2013		Dec. 31, 2012
Construction In Progress By Project [Line Items]
Construction in progress	$ 46,193,135		$ 86,509,865
Estimated cost for current construction in progress	9,300,000
Production Facility For Chilled And Frozen Pork In Changchun [Member]
Construction In Progress By Project [Line Items]
Date or Estimated Date Put in Service	November 2013	[1]
Construction in progress	95,852		46,138
Production Facility For Prepared Pork Products In Changge [Member]
Construction In Progress By Project [Line Items]
Date or Estimated Date Put in Service	December 2013	[1]
Construction in progress	3,828,423
Upgrade For Production Facility In Anyang [Member]
Construction In Progress By Project [Line Items]
Date or Estimated Date Put in Service	May 2013	[1]
Construction in progress	41,525,141		40,838,785
Improvement In Changge Industrial Park [Member]
Construction In Progress By Project [Line Items]
Date or Estimated Date Put in Service	July 2013	[1]
Construction in progress	109,317		164,712
Production Facility For Prepared Pork Products In Tianjin [Member]
Construction In Progress By Project [Line Items]
Date or Estimated Date Put in Service	February 2013	[1]
Construction in progress			2,215,713
Upgrade For Production Facility In Other Locations [Member]
Construction In Progress By Project [Line Items]
Date or Estimated Date Put in Service	April 2013	[1]
Construction in progress	36,211		375,627
Kunshan Facility Land Preparation Cost [Member]
Construction In Progress By Project [Line Items]
Date or Estimated Date Put in Service	April 2013	[1]
Construction in progress	$ 598,191		$ 42,868,890

[1] Represents date all regulatory permits and approvals are received and project is placed in service. In certain cases, construction of a project may be substantially completed and the project may be operational during a testing period prior to such date.

XML

SEGMENT REPORTING (Narrative) (Details)	3 Months Ended
	Mar. 31, 2013
SEGMENT REPORTING [Abstract]
Number of segments	1
Number of business divisions	2
Minimum [Member]
Segment Reporting Information [Line Items]
Number of farm contracts	100
Number of categories	25

XML

EARNINGS PER SHARE (Narrative) (Details)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2013 Computation of Diluted Earnings Per Share [Member]	Dec. 31, 2012 Computation of Diluted Earnings Per Share [Member]
EARNINGS PER SHARE [Abstract]
Antidilutive securities excluded from computation of diluted earnings per share	514,000
Class of Stock [Line Items]
Options and warrants outstanding	787,000	273,000	240,000

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Allowance Activites in Accounts Receivable) (Details) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]
Beginning balance	$ 4,775,526	$ 2,323,920
Additions to allowance for doubtful accounts	1,875,215	2,478,601
Exchange difference	15,517	(26,995)
Ending balance	$ 6,666,258	$ 4,775,526

XML

LAND USE RIGHTS (Tables)

3 Months Ended

Mar. 31, 2013

LAND USE RIGHTS [Abstract]

Schedule of Land Use Rights

	March 31, 2013			December 31, 2012
	(Unaudited)
Land use rights	$	127,278,183		$	124,983,885
Accumulated amortization		(8,865,613	)		(8,198,116	)
Total	$	118,412,570		$	116,785,769

XML

COMMITMENTS AND CONTINGENCIES (Details) (USD $)			3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2013 Henan Zhongpin Food Company Limited [Member]	Mar. 31, 2013 Minimum [Member]	Mar. 31, 2013 Maximum [Member]	Mar. 31, 2013 Huanghe Group Agreement [Member]	May 31, 2012 Huanghe Group Agreement [Member]
Debt Instrument [Line Items]
Maximum borrowing capacity							$ 23,900,000
Loan amount, percentage of pledged assets, no guarantee				50.00%	70.00%
Loan amount, percentage of pledged assets, with guarantee				90.00%	100.00%
Long-term debt	188,677,479	153,976,249				19,700,000
Conversion price per share	$ 13.50
Related Party Transaction [Line Items]
Net book value			47,600,000
Proceeds from sale-leaseback transaction			43,800,000
Quarterly rental payment			$ 2,246,214
Interest rate			5.82%

XML

LONG-TERM BANK LOANS (Schedule of Long-term Bank Loans) (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Debt Instrument [Line Items]
Long-term debt	$ 188,677,479	$ 153,976,249
Current portion	45,303,004	52,183,597
Total long-term portion	143,374,475	101,792,652
China Construction Bank [Member]
Debt Instrument [Line Items]
Long-term debt	24,725,231	24,659,932
Agriculture Bank Of China [Member]
Debt Instrument [Line Items]
Long-term debt	101,453,205	76,525,336
Canadian Government Transfer Loan [Member]
Debt Instrument [Line Items]
Long-term debt	1,052,087	1,052,087
China Merchants Bank [Member]
Debt Instrument [Line Items]
Long-term debt	11,963,821	11,932,225
China Development Bank [Member]
Debt Instrument [Line Items]
Long-term debt	47,855,286	38,183,120
Changge Old Town [Member]
Debt Instrument [Line Items]
Long-term debt	$ 1,627,849	$ 1,623,549

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PROPERTY, PLANT AND EQUIPMENT (Narrative) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 5,899,289	$ 5,537,984
Deferred losses	3,713,441
Assets Held under Capital Leases [Member]
Property, Plant and Equipment [Line Items]
Depreciation expense	164,939	280,688
Amortization of deferred loss	$ 78,888	$ 373,995

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FAIR VALUE MEASUREMENT (Details) (USD $)	Mar. 31, 2013
Long-term loans [Member]
Fair Value Assets And Liabilities Measured On Nonrecurring Basis [Line Items]
Financial liabilities not measured at fair value on recurring basis	$ 188,677,479
Capital leases [Member]
Fair Value Assets And Liabilities Measured On Nonrecurring Basis [Line Items]
Financial liabilities not measured at fair value on recurring basis	1,903,524
Notes Receivable [Member]
Fair Value Assets And Liabilities Measured On Nonrecurring Basis [Line Items]
Financial assets not measured at fair value on recurring basis	64,794,294
Level 1 [Member] | Long-term loans [Member]
Fair Value Assets And Liabilities Measured On Nonrecurring Basis [Line Items]
Financial liabilities not measured at fair value on recurring basis
Level 1 [Member] | Capital leases [Member]
Fair Value Assets And Liabilities Measured On Nonrecurring Basis [Line Items]
Financial liabilities not measured at fair value on recurring basis
Level 1 [Member] | Notes Receivable [Member]
Fair Value Assets And Liabilities Measured On Nonrecurring Basis [Line Items]
Financial assets not measured at fair value on recurring basis
Level 2 [Member] | Long-term loans [Member]
Fair Value Assets And Liabilities Measured On Nonrecurring Basis [Line Items]
Financial liabilities not measured at fair value on recurring basis	188,677,479
Level 2 [Member] | Capital leases [Member]
Fair Value Assets And Liabilities Measured On Nonrecurring Basis [Line Items]
Financial liabilities not measured at fair value on recurring basis	31,903,524
Level 2 [Member] | Notes Receivable [Member]
Fair Value Assets And Liabilities Measured On Nonrecurring Basis [Line Items]
Financial assets not measured at fair value on recurring basis	64,794,294
Level 3 [Member] | Long-term loans [Member]
Fair Value Assets And Liabilities Measured On Nonrecurring Basis [Line Items]
Financial liabilities not measured at fair value on recurring basis
Level 3 [Member] | Capital leases [Member]
Fair Value Assets And Liabilities Measured On Nonrecurring Basis [Line Items]
Financial liabilities not measured at fair value on recurring basis
Level 3 [Member] | Notes Receivable [Member]
Fair Value Assets And Liabilities Measured On Nonrecurring Basis [Line Items]
Financial assets not measured at fair value on recurring basis

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PROPERTY, PLANT AND EQUIPMENT

3 Months Ended

Mar. 31, 2013

PROPERTY, PLANT AND EQUIPMENT [Abstract]

PROPERTY, PLANT AND EQUIPMENT

4. PROPERTY, PLANT AND EQUIPMENT

A summary of property, plant and equipment at cost at March 31, 2013 and December 31, 2012 is as follows:

	March 31, 2013			December 31, 2012
	(Unaudited)
Plants and buildings, net of impairment	$	407,508,102		$	368,003,263
Machinery and equipment, net of impairment		154,610,707			156,202,442
Office furniture and equipment		7,263,995			7,101,927
Vehicles		4,917,002			4,522,289
Accumulated depreciation		(60,105,820	)		(65,382,146	)
Total	$	514,193,986		$	470,447,775

The depreciation and amortization expenses for the three months ended March 31, 2013 and 2012 were $5,899,289 and $5,537,984, respectively.

Of the above information, property, plant and equipment under the sale-leaseback agreement at cost at March 31, 2013 and December 31, 2012 is as follows:

	March 31, 2013			December 31, 2012
	(Unaudited)
Plants and buildings	$	4,869,288		$	-
Machinery and equipment		42,542,027			-
Vehicles		127,271			-
Accumulated depreciation		(165,193	)		-
Total	$	47,373,393		$	-

The deferred losses included in the property, plant and equipment balance were $3,713,441 and nil at March 31, 2013 and December 31, 2012, respectively, and would be amortized over the lease term. Of the depreciation expenses, $78,888 and $164,939 were amortization of deferred loss and depreciation expense from assets under capital lease, respectively, for the three months ended March 31, 2013; and $373,995 and $280,688 were amortization of deferred loss and depreciation expense from assets under capital lease, respectively, for the three months ended March 31, 2012.

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LONG-TERM BANK LOANS (Narrative) (Details)	3 Months Ended			3 Months Ended												3 Months Ended			3 Months Ended			1 Months Ended	3 Months Ended			3 Months Ended			3 Months Ended				3 Months Ended	30 Months Ended			3 Months Ended							3 Months Ended				3 Months Ended			39 Months Ended			3 Months Ended				3 Months Ended					1 Months Ended	3 Months Ended
	Mar. 31, 2013 USD ($)	Mar. 31, 2012 USD ($)	Dec. 31, 2012 USD ($)	Mar. 31, 2013 China Development Bank [Member] USD ($)	Feb. 28, 2013 China Development Bank [Member] USD ($)	Feb. 28, 2013 China Development Bank [Member] CNY	Dec. 31, 2012 China Development Bank [Member] USD ($)	Oct. 31, 2012 China Development Bank [Member] USD ($)	Oct. 31, 2012 China Development Bank [Member] CNY	Jul. 31, 2012 China Development Bank [Member] USD ($)	Jul. 31, 2012 China Development Bank [Member] CNY	Apr. 30, 2012 China Development Bank [Member] USD ($)	Apr. 30, 2012 China Development Bank [Member] CNY	Mar. 31, 2013 China Construction Bank [Member] USD ($)	Dec. 31, 2012 China Construction Bank [Member] USD ($)	Mar. 31, 2013 China Construction Bank [Member] Loan One [Member]	Apr. 30, 2012 China Construction Bank [Member] Loan One [Member] USD ($)	Apr. 30, 2012 China Construction Bank [Member] Loan One [Member] CNY	Mar. 31, 2013 China Construction Bank [Member] Loan Two [Member]	Mar. 31, 2012 China Construction Bank [Member] Loan Two [Member] USD ($)	Mar. 31, 2012 China Construction Bank [Member] Loan Two [Member] CNY	Mar. 31, 2013 China Construction Bank [Member] Loan Three [Member] USD ($)	Mar. 31, 2013 China Construction Bank [Member] Loan Three [Member] USD ($)	Jun. 30, 2011 China Construction Bank [Member] Loan Three [Member] USD ($)	Jun. 30, 2011 China Construction Bank [Member] Loan Three [Member] CNY	Mar. 31, 2013 China Construction Bank [Member] Loan Four [Member]	Jun. 30, 2010 China Construction Bank [Member] Loan Four [Member] USD ($)	Jun. 30, 2010 China Construction Bank [Member] Loan Four [Member] CNY	Mar. 31, 2013 China Construction Bank [Member] Loan Five [Member] USD ($)	Mar. 31, 2013 China Construction Bank [Member] Loan Five [Member] CNY	Mar. 31, 2013 Agriculture Bank Of China [Member] USD ($)	Dec. 31, 2012 Agriculture Bank Of China [Member] USD ($)	Mar. 31, 2013 Agriculture Bank Of China [Member] Loan One [Member] USD ($)	Mar. 31, 2013 Agriculture Bank Of China [Member] Loan One [Member] USD ($)	Sep. 30, 2010 Agriculture Bank Of China [Member] Loan One [Member] USD ($)	Sep. 30, 2010 Agriculture Bank Of China [Member] Loan One [Member] CNY	Mar. 31, 2013 Agriculture Bank Of China [Member] Loan Three [Member] USD ($)	May 31, 2011 Agriculture Bank Of China [Member] Loan Three [Member] USD ($)	May 31, 2011 Agriculture Bank Of China [Member] Loan Three [Member] CNY	Nov. 30, 2010 Agriculture Bank Of China [Member] Loan Three [Member] USD ($)	Nov. 30, 2010 Agriculture Bank Of China [Member] Loan Three [Member] CNY	Jul. 31, 2010 Agriculture Bank Of China [Member] Loan Three [Member] USD ($)	Jul. 31, 2010 Agriculture Bank Of China [Member] Loan Three [Member] CNY	Mar. 31, 2013 Agriculture Bank Of China [Member] Loan Four [Member] USD ($)	Mar. 31, 2013 Agriculture Bank Of China [Member] Loan Four [Member] CNY	Jan. 31, 2013 Agriculture Bank Of China [Member] Loan Four [Member] USD ($)	Jan. 31, 2013 Agriculture Bank Of China [Member] Loan Four [Member] CNY	Mar. 31, 2013 Agriculture Bank Of China [Member] Loan Five [Member] USD ($)	Mar. 31, 2013 Agriculture Bank Of China [Member] Loan Five [Member] CNY	Mar. 31, 2013 Agriculture Bank Of China [Member] Loan Six [Member] USD ($)	Mar. 31, 2013 Agriculture Bank Of China [Member] Loan Six [Member] USD ($)	Dec. 31, 2009 Agriculture Bank Of China [Member] Loan Six [Member] USD ($)	Dec. 31, 2009 Agriculture Bank Of China [Member] Loan Six [Member] CNY	Mar. 31, 2013 Changge Old Town [Member] USD ($)	Dec. 31, 2012 Changge Old Town [Member] USD ($)	Apr. 30, 2010 Changge Old Town [Member] USD ($)	Apr. 30, 2010 Changge Old Town [Member] CNY	Mar. 31, 2013 China Merchants Bank [Member] USD ($)	Dec. 31, 2012 China Merchants Bank [Member] USD ($)	Mar. 31, 2010 China Merchants Bank [Member]	Nov. 30, 2009 China Merchants Bank [Member] USD ($)	Nov. 30, 2009 China Merchants Bank [Member] CNY	May 31, 2002 Bank Of Communications Zhengzhou Branch [Member] USD ($)	Mar. 31, 2013 Bank Of Communications Zhengzhou Branch [Member]
Debt Instrument [Line Items]
Maximum borrowing capacity												$ 47,900,000	300,000,000																													$ 47,900,000	300,000,000			$ 28,700,000	180,000,000
Long-term debt	188,677,479		153,976,249	47,855,286			38,183,120							24,725,231	24,659,932																101,453,205	76,525,336																						1,627,849	1,623,549			11,963,821	11,932,225
Amount borrowed					9,600,000	60,000,000		6,200,000	39,000,000	12,100,000	76,000,000	19,900,000	125,000,000				2,400,000	15,000,000		8,000,000	50,000,000			8,000,000	50,000,000		6,400,000	40,000,000	3,200,000	20,000,000					12,000,000	75,000,000		17,500,000	110,000,000	12,800,000	80,000,000	8,000,000	50,000,000	19,100,000	120,000,000	7,000,000	44,000,000	16,000,000	100,000,000			11,200,000	70,000,000			1,600,000	10,200,000				15,200,000	95,000,000	2,504,969
Remaining amount that can be borrowed																																					9,600,000
Amount outstanding																						4,800,000	4,800,000										11,300,000	11,300,000			38,300,000							26,200,000	164,000,000					9,700,000	9,700,000
Interest rate at period end				7.21%												6.65%			6.65%			6.08%	6.08%			5.76%			6.15%	6.15%			6.40%	6.40%			6.40%							7.04%	7.04%			6.46%	6.46%	6.40%	6.40%							6.40%
Interest rate																																																						7.00%									6.02%
Repayment date																Mar. 01, 2014			Mar. 01, 2014							Jun. 29, 2013			Mar. 01, 2015	Mar. 01, 2015																																		Nov. 15, 2041
Repayment date, minimum				Apr. 01, 2013																			Mar. 01, 2013										Sep. 01, 2011				Jun. 01, 2013							Jan. 01, 2014	Jan. 01, 2014			Jun. 01, 2013	Jun. 01, 2013	Dec. 01, 2010				Jun. 30, 2010				Nov. 01, 2012
Repayment date, maximum				May 01, 2020																			Jun. 01, 2013										Dec. 01, 2014				Jun. 01, 2015							Jan. 01, 2018	Jan. 01, 2018			Mar. 01, 2016	Mar. 01, 2016	Dec. 01, 2014								Nov. 01, 2014
Repayment of long-term loans	20,549,090																					3,200,000												700,000																	1,500,000
Percentage of loan drawn																																																												50.00%	50.00%	50.00%
Loan term																																																															40 years
Percentage of principal amount bearing interest																																																															58.00%
Principal amount bearing interest																																																															1,452,882
Periodic installments amount																																																															42,083
Total debt	435,500,000
Secured loans	134,154,317
Pledged assets	$ 191,620,720

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FAIR VALUE MEASUREMENT (Tables)

3 Months Ended

Mar. 31, 2013

FAIR VALUE MEASUREMENT [Abstract]

Schedule of Assets and Liabilities Not Measured at Fair Value on Recurring Basis

	Total		Level 1		Level 2		Level 3
Capital leases	$	31,903,524		-	$	31,903,524		-
Note receivable	$	64,794,294		-	$	64,794,294		-
Long term loans	$	188,677,479		-	$	188,677,479		-

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EARNINGS PER SHARE (Tables)

3 Months Ended

Mar. 31, 2013

EARNINGS PER SHARE [Abstract]

Schedule of Earnings Per Share

	Three Months Ended March 31,
	2013		2012
	(Unaudited)		(Unaudited)
Numerator:
Net income attributable to common shares	$	10,609,714	$	12,197,315
Denominator:
Weighted average number of common shares outstanding - basic		37,209,344		37,498,563
Dilutive effect of stock options		69,286		4,456
Weighted average number of common shares outstanding - diluted		37,278,630		37,503,019
Basic earnings per share	$	0.29	$	0.33
Diluted earnings per share	$	0.28	$	0.33

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EQUITY TRANSACTIONS (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
EQUITY TRANSACTIONS [Abstract]
Stock-based compensation		$ 417,749
Number of shares repurchased		368,300
Shares repurchased, average cost per share		$ 8.4023

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SEGMENT REPORTING (Tables)

3 Months Ended

Mar. 31, 2013

SEGMENT REPORTING [Abstract]

Schedule of Sales by Division

	Sales by Division (U.S. dollars in millions) Three Months Ended March 31,
	2013			2012
	(Unaudited)			(Unaudited)
Pork and Pork Products:
Chilled Pork	$	243.1		$	248.8
Frozen Pork		58.6			67.0
Prepared Pork Products		78.4			55.7
Vegetables and Fruits		2.3			2.6
Total	$	382.4		$	374.1
Cost of Sales
Pork Products	$	341.9		$	336.4
Vegetables and Fruits		2.0			2.3
Gross Profit Margin:
Pork Products		10.0	%		9.4	%
Vegetables and Fruits		13.0	%		11.5	%

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ORGANIZATION AND NATURE OF OPERATIONS (Details)		3 Months Ended
	Mar. 31, 2013	Mar. 31, 2013 Henan Zhongpin Food Company Limited [Member] USD ($)	Mar. 31, 2013 Henan Zhongpin Food Share Company Limited [Member] USD ($)		Mar. 31, 2013 Henan Zhongpin Food Share Company Limited [Member] CNY		Mar. 31, 2013 Henan Zhongpin Import And Export Trading Company Limited [Member] USD ($)	Mar. 31, 2013 Henan Zhongpin Import And Export Trading Company Limited [Member] CNY	Mar. 31, 2013 Zhumadian Zhongpin Food Company Limited [Member] USD ($)	Mar. 31, 2013 Zhumadian Zhongpin Food Company Limited [Member] CNY	Mar. 31, 2013 Anyang Zhongpin Food Company Limited [Member] USD ($)	Mar. 31, 2013 Anyang Zhongpin Food Company Limited [Member] CNY	Mar. 31, 2013 Henan Zhongpin Fresh Food Logistics Company Limited [Member] USD ($)	Mar. 31, 2013 Henan Zhongpin Fresh Food Logistics Company Limited [Member] CNY	Mar. 31, 2013 Deyang Zhongpin Food Company Limited [Member] USD ($)	Mar. 31, 2013 Deyang Zhongpin Food Company Limited [Member] CNY	Mar. 31, 2013 Henan Zhongpin Business Development Company Limited [Member] USD ($)	Mar. 31, 2013 Henan Zhongpin Business Development Company Limited [Member] CNY	Mar. 31, 2013 Luoyang Zhongpin Food Company Limited [Member] USD ($)	Mar. 31, 2013 Luoyang Zhongpin Food Company Limited [Member] CNY	Mar. 31, 2013 Yongcheng Zhongpin Food Company Limited [Member] USD ($)	Mar. 31, 2013 Yongcheng Zhongpin Food Company Limited [Member] CNY	Mar. 31, 2013 Tianjin Zhongpin Food Company Limited [Member] USD ($)	Mar. 31, 2013 Tianjin Zhongpin Food Company Limited [Member] CNY	Mar. 31, 2013 Jilin Zhongpin Food Company Limited [Member] USD ($)	Mar. 31, 2013 Jilin Zhongpin Food Company Limited [Member] CNY	Mar. 31, 2013 Henan Zhongpin Agriculture And Animal Husbandry Industry Development Company Limited [Member] USD ($)	Mar. 31, 2013 Henan Zhongpin Agriculture And Animal Husbandry Industry Development Company Limited [Member] CNY	Mar. 31, 2013 Taizhou Zhongpin Food Company Limited [Member] USD ($)	Mar. 31, 2013 Taizhou Zhongpin Food Company Limited [Member] CNY	Mar. 31, 2013 Changchun Zhongpin Food Company Limited [Member] USD ($)	Mar. 31, 2013 Changchun Zhongpin Food Company Limited [Member] CNY	Mar. 31, 2013 Henan Zhongpin Xinda Agriculture And Animal Husbandry Company Limited [Member] USD ($)	Mar. 31, 2013 Henan Zhongpin Xinda Agriculture And Animal Husbandry Company Limited [Member] CNY	Mar. 31, 2013 Kunshan Zhongpin Cold Chain Logistics Company Limited [Member] USD ($)	Mar. 31, 2013 Kunshan Zhongpin Cold Chain Logistics Company Limited [Member] CNY	Mar. 31, 2013 Tangshan Zhongpin Food Company Limited [Member] USD ($)	Mar. 31, 2013 Tangshan Zhongpin Food Company Limited [Member] CNY	Mar. 31, 2013 Zhongpin Trading Company Limited [Member] USD ($)	Mar. 31, 2013 Tianjin Jinghui Hogs Breeding Company Limited [Member] USD ($)	Mar. 31, 2013 Tianjin Jinghui Hogs Breeding Company Limited [Member] CNY	Mar. 31, 2013 Stockholders [Member]	Mar. 31, 2013 Falcon Link Investment Limited [Member]
ORGANIZATION AND NATURE OF OPERATIONS [Abstract]
Number of business divisions	2
Schedule of Equity Method Investments [Line Items]
Date of Incorporation		May 20, 2005	Jan. 20, 2000		Jan. 20, 2000		Aug. 11, 2004	Aug. 11, 2004	Jun. 07, 2006	Jun. 07, 2006	Aug. 21, 2006	Aug. 21, 2006	Sep. 14, 2006	Sep. 14, 2006	Sep. 25, 2006	Sep. 25, 2006	Sep. 27, 2006	Sep. 27, 2006	Jan. 18, 2007	Jan. 18, 2007	Mar. 01, 2007	Mar. 01, 2007	Sep. 14, 2007	Sep. 14, 2007	Dec. 11, 2008	Dec. 11, 2008	Dec. 26, 2008	Dec. 26, 2008	May 12, 2010	May 12, 2010	Aug. 06, 2010	Aug. 06, 2010	Jun. 01, 2011	Jun. 01, 2011	Jun. 03, 2011	Jun. 03, 2011	Nov. 15, 2011	Nov. 15, 2011	Sep. 11, 2012	Nov. 12, 2012	Nov. 12, 2012
Registered/Authorized Capital		$ 203,300,000	$ 219,699,181		1,430,000,000		$ 611,111	5,060,000	$ 8,585,398	60,000,000	$ 5,094,422	34,800,000	$ 189,665	1,500,000	$ 1,893,652	15,000,000	$ 632,215	5,000,000	$ 8,703,452	60,000,000	$ 8,783,487	60,000,000	$ 14,639,145	100,000,000	$ 145,688	1,000,000	$ 1,461,796	10,000,000	$ 15,872,008	100,000,000	$ 26,292,994	170,000,000	$ 2,287,841	15,000,000	$ 46,356,388	300,000,000	$ 788,196	5,000,000	$ 1,000,000	$ 158,700	1,000,000
Percentage of Ownership		100.00%	100.00%	[1]	100.00%	[1]	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	65.00%	65.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	100.00%	1.19%	100.00%
Number of shareholders with interest																																										6

[1] Includes a 1.19% ownership interest of another six stockholders with respect to which Henan Zhongpin Food Company Limited is entitled to all economic benefits and the right to vote pursuant to the terms of a trust agreement with such stockholders.

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INVENTORIES

3 Months Ended

Mar. 31, 2013

INVENTORIES [Abstract]

INVENTORIES

3. INVENTORIES

Inventories at March 31, 2013 and December 31, 2012 consisted of the following:

	March 31, 2013		December 31, 2012
	(Unaudited)
Raw materials	$	4,684,028	$	6,466,664
Low value consumables and packaging		1,568,000		1,685,431
Work-in-progress		4,202,916		3,955,169
Finished goods		24,145,075		25,871,962
Total	$	34,600,019	$	37,979,226

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) (USD $)	3 Months Ended							3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013 Computation of Diluted Earnings Per Share [Member]	Dec. 31, 2012 Computation of Diluted Earnings Per Share [Member]	Mar. 31, 2013 Goods Purchased [Member]	Mar. 31, 2013 Chilled Pork Products, Frozen Pork Products, and Vegetable and Fruit Products [Member]	Mar. 31, 2013 Meat Products [Member]	Mar. 31, 2013 Minimum [Member]	Mar. 31, 2013 Maximum [Member]
Bank Notes Receivable
Bank notes receivable maturity period	180 days
Accounts Receivable
Allowance for doubtful accounts percentage	100.00%
Aggregate amount of accounts receivable, percentage	5.00%
Statement [Line Items]
Land use rights, term								40 years	50 years
Employee Benefit Plan
Provision for employee benefits	$ 655,743	$ 227,438
Shipping and Handling Cost
Shipping and handling fees	2,400,000	2,400,000
Advertising Costs
Advertising expense	377,261	282,921
Product and Service [Line Items]
VAT rate					13.00%	13.00%	17.00%
VAT write-off	1,900,000
Earnings Per Share
Antidilutive securities excluded from computation of diluted earnings per share	514,000
Class of Stock [Line Items]
Options and warrants outstanding	787,000		273,000	240,000
Research and Development Expenses
Research and development expense	$ 132,331	$ 86,628

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SHORT-TERM BANK LOANS (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Short-term Debt [Line Items]
Short-term bank loan, principal amount	$ 246,785,205	$ 228,632,849
Interest rate for short term loans, minimum	5.88%
Interest rate for short term loans, maximum	7.20%
Secured By Subsidiaries [Member]
Short-term Debt [Line Items]
Short-term bank loan, principal amount	113,200,000	116,100,000
Credit Loans [Member]
Short-term Debt [Line Items]
Short-term bank loan, principal amount	111,200,000	85,400,000
Henan Huanghe Enterprises Group Company Limited [Member]
Short-term Debt [Line Items]
Short-term bank loan, principal amount	14,400,000	19,100,000
Secured By Land Use Rights [Member]
Short-term Debt [Line Items]
Short-term bank loan, principal amount	$ 8,000,000	$ 8,000,000

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)	Mar. 31, 2013	Dec. 31, 2012
Current assets
Cash and cash equivalents	$ 294,315,174	$ 176,441,332
Restricted cash	105,866,898	109,954,161
Bank notes receivable	102,110,143	72,369,700
Accounts receivable, net of allowance for doubtful accounts of $6,666,258 and $4,775,526	120,800,332	85,167,801
Other receivables, net of allowance for doubtful accounts of $509,084 and $493,484	977,803	865,060
Purchase deposits	7,034,952	6,798,356
Inventories	34,600,019	37,979,226
Prepaid expenses	389,955	449,127
Allowance receivables	958,698	956,166
VAT recoverable	33,410,038	32,719,543
Deferred tax assets	802,297	800,179
Other current assets	699,311	73,413
Total current assets	701,965,620	524,574,064
Long-term investment	478,553	477,289
Property, plant and equipment, net	514,193,986	470,447,775
Deposits for purchase of land use rights	15,389,482	17,285,461
Construction in progress	46,193,135	86,509,865
Land use rights	118,412,570	116,785,769
Other non-current assets	4,452,434	2,554,680
Total assets	1,401,085,780	1,218,634,903
Current liabilities
Short-term loans	246,785,205	228,632,849
Bank notes payable	209,955,495	219,333,386
Long-term loans - current portion	45,303,004	52,183,597
Short-term financial bonds	95,710,571
Capital lease obligation - current portion	7,298,023
Accounts payable	13,498,479	11,918,351
Other payables	23,663,592	24,053,321
Accrued liabilities	19,335,514	18,353,887
Deposits from customers	7,343,501	9,935,877
Tax payable	1,396,404	1,778,724
Deferred subsidy - current portion	84,943	84,852
Total current liabilities	670,374,731	566,274,844
Deferred tax liabilities	745,839	743,869
Long-term loans	143,374,475	101,792,652
Capital lease obligation	24,605,501
Deferred subsidy - long-term portion	2,371,185	2,386,002
Total liabilities	841,471,731	671,197,367
Equity
Common stock: par value $0.001; 100,000,000 authorized; 40,376,182 and 40,376,182 shares issued as of March 31, 2013 and December 31, 2012; and 37,209,344 and 37,209,344 shares outstanding as of March 31, 2013 and December 31, 2012	40,376	40,376
Additional paid in capital	240,063,993	240,063,993
Retained earnings	288,878,462	278,268,748
Treasury stock, at cost: 3,166,838 and 3,166,838 shares at March 31, 2013 and December 31, 2012	(26,225,646)	(26,225,646)
Accumulated other comprehensive income	55,967,484	54,413,960
Total Zhongpin Inc. shareholders' equity	558,724,669	546,561,431
Non-controlling interests	889,380	876,105
Total shareholders' equity	559,614,049	547,437,536
Total liabilities and shareholders' equity	$ 1,401,085,780	$ 1,218,634,903

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EARNINGS PER SHARE (Schedule of Earnings Per Share) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Numerator:
Net income attributable to common shareholders	$ 10,609,714	$ 12,197,315
Denominator:
Weighted average number of common shares outstanding - basic	37,209,344	37,498,563
Dilutive effect of stock options	69,286	4,456
Weighted average number of common shares outstanding - diluted	37,278,630	37,503,019
Basic earnings per share	$ 0.29	$ 0.33
Diluted earnings per share	$ 0.28	$ 0.33

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ORGANIZATION AND NATURE OF OPERATIONS

3 Months Ended

Mar. 31, 2013

ORGANIZATION AND NATURE OF OPERATIONS [Abstract]

ORGANIZATION AND NATURE OF OPERATIONS

1. ORGANIZATION AND NATURE OF OPERATIONS

Zhongpin Inc. (the "Company") was established under the laws of the State of Delaware on February 4, 2003. The Company is a public holding company holding equity interests in its subsidiaries outside the U.S. Its operating subsidiaries are located in the People's Republic of China (the "PRC") and focus on two business divisions: pork and pork products, and vegetables and fruits. The pork and pork products division is involved primarily in the processing of live hogs into fresh, frozen and processed pork products which are sold domestically to branded stores, food retailers, food service distributors, restaurants, hotel chains and non-commercial food service establishments, such as schools, governments, healthcare facilities, the military and other food processors, as well as to certain international markets in a limited scope. The vegetables and fruits division is involved primarily in the processing of frozen vegetables and fruits that are sold to the Company's branded stores and food retailers.

The Company holds a 100% interest in Falcon Link Investment Limited, a company organized under the laws of the British Virgin Islands ("Falcon"), through which the Company holds a 100% interest in its China-based subsidiaries, each of which was organized under the laws of China. The Company's China-based subsidiaries include the following:

Name	Date of Incorporation		Registered/Authorized Capital	Percentage of Ownership
Henan Zhongpin Food Company Limited		May 20, 2005	$203,300,000		100	%
Henan Zhongpin Food Share Company Limited ("Henan Zhongpin")		Jan. 20, 2000	1,430,000,000 RMB ($219,699,181)		100	%(1)
Henan Zhongpin Import and Export Trading Company Limited		Aug. 11, 2004	5,060,000 RMB ($611,111)		100	%
Zhumadian Zhongpin Food Company Limited ("Zhumadian Zhongpin")		June 7, 2006	60,000,000 RMB ($8,585,398)		100	%
Anyang Zhongpin Food Company Limited		Aug. 21, 2006	34,800,000 RMB ($5,094,422)		100	%
Henan Zhongpin Fresh Food Logistics Company Limited		Sept. 14, 2006	1,500,000 RMB ($189,665)		100	%
Deyang Zhongpin Food Company Limited		Sept. 25, 2006	15,000,000 RMB ($1,893,652)		100	%
Henan Zhongpin Business Development Company Limited		Sept. 27, 2006	5,000,000 RMB ($632,215)		100	%
Luoyang Zhongpin Food Company Limited ("Luoyang Zhongpin")		Jan. 18, 2007	60,000,000 RMB ($8,703,452)		100	%
Yongcheng Zhongpin Food Company Limited ("Yongcheng Zhongpin")		Mar. 1, 2007	60,000,000 RMB ($8,783,487)		100	%
Tianjin Zhongpin Food Company Limited ("Tianjin Zhongpin")		Sept. 14, 2007	100,000,000 RMB ( $14,639,145 )		100	%

Name	Date of Incorporation		Registered/Authorized Capital	Percentage of Ownership
Jilin Zhongpin Food Company Limited		Dec. 11, 2008	1,000,000 RMB ($145,688)		100	%
Henan Zhongpin Agriculture and Animal Husbandry Industry Development Company Limited		Dec. 26, 2008	10,000,000 RMB ($1,461,796)		100	%
Taizhou Zhongpin Food Company Limited ("Taizhou Zhongpin")		May 12, 2010	100,000,000 RMB ($15,872,008)		100	%
Changchun Zhongpin Food Company Limited ("Changchun Zhongpin")		Aug. 6, 2010	170,000,000 RMB ($26,292,994)		100	%
Henan Zhongpin Xinda Agriculture and Animal Husbandry Company Limited		Jun. 1, 2011	15,000,000 RMB ($2,287,841)		65	%
Kunshan Zhongpin Cold Chain Logistics Company Limited		Jun. 3, 2011	300,000,000 RMB ($46,356,388)		100	%
Tangshan Zhongpin Food Company Limited		Nov. 15, 2011	5,000,000 RMB ($788,196)		100	%
Zhongpin (Hong Kong) Trading Co., Limited		Sept. 11, 2012	$1,000,000		100	%
Tianjin Jinghui Hogs Breeding Company Limited		Nov.12, 2012	1,000,000RMB ($158,700)		100	%

(1) Includes a 1.19% ownership interest of another six stockholders with respect to which Henan Zhongpin Food Company Limited is entitled to all economic benefits and the right to vote pursuant to the terms of a trust agreement with such stockholders.

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INVENTORIES (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
INVENTORIES [Abstract]
Raw materials	$ 4,684,028	$ 6,466,664
Low value consumables and packing	1,568,000	1,685,431
Work-in-progress	4,202,916	3,955,169
Finished goods	24,145,075	25,871,962
Inventories	$ 34,600,019	$ 37,979,226

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2013

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Schedule of Allowance Activities in Accounts Receivable

	March 31, 2013		December 31, 2012
Beginning balance	$	4,775,526	$	2,323,920
Additions to allowance for bad debt		1,875,215		2,478,601
Exchange difference		15,517		(26,995	)
Ending balance	$	6,666,258	$	4,775,526

Schedule of Estimated Useful Lives of Property, Plant and Equipment

	Estimated Useful Economic Life
Plants and buildings	5-30 years
Machinery and equipment	5-20 years
Office furniture and equipment	3-5 years
Vehicles	5 years

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PROPERTY, PLANT AND EQUIPMENT (Schedule of Property, Plant and Equipment) (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Property, Plant and Equipment [Line Items]
Accumulated depreciation	$ (60,105,820)	$ (65,382,146)
Total	514,193,986	470,447,775
Sale Leaseback Agreement [Member]
Property, Plant and Equipment [Line Items]
Accumulated depreciation	(165,193)
Total	47,373,393
Plant and buildings [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	407,508,102	368,003,263
Plant and buildings [Member] | Sale Leaseback Agreement [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	4,869,288
Machinery and equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	154,610,707	156,202,442
Machinery and equipment [Member] | Sale Leaseback Agreement [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	42,542,027
Office furniture and equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	7,263,995	7,101,927
Office furniture and equipment [Member] | Sale Leaseback Agreement [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	4,917,002	4,522,289
Vehicles [Member] | Sale Leaseback Agreement [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 127,271

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PROPERTY, PLANT AND EQUIPMENT (Tables)

3 Months Ended

Mar. 31, 2013

Property, Plant and Equipment [Line Items]

Schedule of Property, Plant and Equipment

	March 31, 2013			December 31, 2012
	(Unaudited)
Plants and buildings, net of impairment	$	407,508,102		$	368,003,263
Machinery and equipment, net of impairment		154,610,707			156,202,442
Office furniture and equipment		7,263,995			7,101,927
Vehicles		4,917,002			4,522,289
Accumulated depreciation		(60,105,820	)		(65,382,146	)
Total	$	514,193,986		$	470,447,775

Sale Leaseback Agreement [Member]

Property, Plant and Equipment [Line Items]

Schedule of Property, Plant and Equipment

	March 31, 2013			December 31, 2012
	(Unaudited)
Plants and buildings	$	4,869,288		$	-
Machinery and equipment		42,542,027			-
Vehicles		127,271			-
Accumulated depreciation		(165,193	)		-
Total	$	47,373,393		$	-

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2013

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation and Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of Zhongpin Inc. and its subsidiaries (collectively referred to herein as the "Company"). All significant intercompany accounts and transactions have been eliminated during the process of consolidation. The condensed consolidated financial statements were prepared in accordance with GAAP for interim financial information.

Non-controlling Interests

Effective July 1, 2009, the Company adopted the authoritative pronouncement issued by the Financial Accounting Standards Board (the "FASB") regarding non-controlling interests in consolidated financial statements. The pronouncement requires non-controlling interests to be separately presented as a component of equity in the consolidated financial statements.

Foreign Currency Translations and Transactions

RMB, the national currency of China, is the primary currency that the Company's China-based subsidiaries use. The United States dollar ("U.S. dollar") is the functional currency used by Falcon and Zhongpin Inc. to record all of their activities. The Company uses the U.S. dollar for financial reporting purposes.

The Company translates assets and liabilities into U.S. dollars using the middle rate published by the People's Bank of China as of the balance sheet date. The condensed consolidated statement of income is translated at average rates during the reporting period. Adjustments resulting from the translation of financial statements from RMB into U.S. dollars are recorded in stockholders' equity as part of accumulated comprehensive loss - translation adjustments. Gains or losses resulting from transactions in currencies other than RMB are reflected in income for the reporting period.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Certain accounting principles require subjective and complex judgments to be used in the preparation of financial statements. Accordingly, a different financial presentation could result depending on the judgments, estimates, or assumptions that are used. Such estimates and assumptions include, but are not specifically limited to, those required in the valuation of long-lived assets, allowance for doubtful accounts, reserves for inventory obsolescence, valuation allowances for value added tax ("VAT") recoverable, deferred tax assets and determination of stock based compensation.

Revenue Recognition

Revenues generated from the sales of various meat products and vegetables and fruits are recognized when these products are delivered to customers in accordance with previously agreed upon pricing and delivery arrangements, and the collectability of these sales is reasonably assured. Since the products sold by the Company are primarily perishable and frozen food products, the right of return is only valid for a few days and has been determined to be insignificant by the management of the Company. Accordingly, no provision has been made for returnable goods. Revenues presented on the consolidated statements of operations and comprehensive income are net of sales taxes.

Cash and Cash Equivalents

The Company considers all highly-liquid investments with maturity of three months or less to be cash equivalents. The Company maintains its cash accounts at creditworthy financial institutions and closely monitors the movements of its cash positions.

Restricted Cash and Bank Notes Payable

Under the terms of the credit agreements with certain of its lenders, Henan Zhongpin has agreed to maintain with such lenders an amount of cash that will serve as collateral for its delivery of such lenders' bank promissory notes. The amount of bank promissory notes that are to be delivered by Henan Zhongpin to such lenders can be up to twice the amount of such deposits. As such deposits may not be withdrawn by Henan Zhongpin without restriction, such cash deposits are presented as "restricted cash" on the consolidated balance sheets.

Bank Notes Receivable

The Company only accepts notes issued by banks in the normal course of business as payment for products sold by the Company. These bank notes receivable have maturity dates of up to 180 days and bear no interest. In addition, the Company may also acquire bank notes receivable, with maturity of less than six months, from third parties, at a lower cost compared to the face value of the bank notes, so as to earn the interest.

The Company can hold these bank notes until the maturity date and collect the amount from the issuing banks, or the Company can use these bank notes as means for payment for goods or services received. The Company accrues no provision for these bank notes because such bank notes have little risk of default in China.

Accounts Receivable

During the normal course of business, the Company's policy is to ask customers to make deposits in reasonable and meaningful amounts on a case-by-case basis. For certain customers, the Company may extend unsecured credit.

The Company regularly evaluates and monitors the creditworthiness of each of its customers in accordance with the prevailing practice in the meat industry and based on general economic conditions in China. The Company maintains a general policy of providing 100% allowance for doubtful accounts in an amount equal to the aggregate amount of those accounts that are not collected within one year plus an amount equal to 5% of the aggregate amount of accounts receivable less than one year old. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. The Company also examines the credit terms of significant customers regularly and asks for more cash deposits if these customers appear to have any indicators of delaying their payments to the Company. Such deposits are usually applied for the collection of the outstanding accounts receivable during the year. With such a practice in place, the Company did not have any specific allowance for doubtful accounts provided against specific customers at March 31, 2013 and December 31, 2012, respectively.

The following table presents allowance activities in accounts receivable.

	March 31, 2013		December 31, 2012
Beginning balance	$	4,775,526	$	2,323,920
Additions to allowance for bad debt		1,875,215		2,478,601
Exchange difference		15,517		(26,995	)
Ending balance	$	6,666,258	$	4,775,526

Inventories

Inventories are comprised of raw materials and low-value consumables, work-in-progress, and finished goods. Inventories are stated at the lower of cost or market-based prices according to the weighted average method. Production cost components include the purchase cost of live hogs, direct labor, depreciation, packaging material, utility expense and other manufacturing overhead. By using a systematic costing system, the production cost is allocated to various products at the stage of work-in-progress and finished goods, respectively. Net realizable value is the estimated selling price, in the ordinary course of business, less estimated costs to complete and dispose. The Company regularly inspects the shelf life of prepared foods and, if necessary, write down their carrying value based on their salability and expiration dates as cost of goods sold.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost and are stated net of accumulated depreciation. Depreciation expense is determined using the straight-line method over the estimated useful lives of the assets. Leased properties under capital leases are also amortized over the estimated useful life of the property due to the transfer of ownership or availability of bargain purchase option at the end of the lease term. Estimated useful lives of the assets are as follows:

	Estimated Useful Economic Life
Plants and buildings	5-30 years
Machinery and equipment	5-20 years
Office furniture and equipment	3-5 years
Vehicles	5 years

Maintenance and repairs are charged directly to expense as incurred, whereas improvements and renewals are generally capitalized in their respective property accounts. When an item is retired or otherwise disposed of, the cost and applicable accumulated depreciation are removed and the resulting gain or loss is recognized and reflected as a line item under other income (expenses).

Land Use Rights

The Chinese government owns all of the parcels of land on which the Company's plants are built. In China, land use rights for commercial purposes are granted by the PRC government typically for a term of 40-50 years. The Company is required to pay a lump sum of money to the State Land and Resource Ministry of the applicable locality to acquire such rights. The Company capitalizes the lump sum of money paid and amortizes these land use rights by using the straight line method over the term of the land use license granted by the applicable governmental authority.

Construction in Progress and Interest Capitalization

Construction in progress is stated at cost. The cost accumulation process starts from the time the construction project is set-up and ends at the time the project has been put into service and all regulatory permits and approvals have been received. The Company borrows bank loans from time to time for these construction projects. The interest costs incurred for these construction projects have been capitalized during the construction process.

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of that asset. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.

Fair Value of Financial Instruments

The carrying amount of cash and cash equivalents, accounts receivable, other receivables, advance to vendors, accounts payable and accrued liabilities, capital lease obligations and short-term loans are reasonable estimates of their fair value because of the short maturity of these items. The carrying amounts of capital lease obligations approximate their fair value based on the Company's current incremental borrowing rates for similar types of arrangements. Long-term debt approximates fair value since the bank term loans are fixed rate instruments and bear interests at the rate dictated and published by the People's Bank of China. The current rates published by the People's Bank of China approximate the interest rates of the loans outstanding.

Employee Benefit Plan

Full time employees of the PRC entities participate in a government mandated employer defined contribution plan, pursuant to which certain pension benefits, medical care, unemployment insurance and other welfare benefits are provided to employees. Chinese labor regulations require the Company to accrue for these benefits based on certain percentages of the employees' salaries. The total provision for such employee benefits was $655,743 and $227,438 for three months ended March 31, 2013 and 2012.

Shipping and Handling Cost

All shipping and handling fees are included in selling expenses. Shipping and handling fees amounted to $2.4 million and $ 2.4 million for the three months ended March 31, 2013 and 2012, respectively.

Advertising Costs

Advertising costs are expensed as incurred. Advertising expense amounted to $377,261 and $282,921 for the three months ended March 31, 2013 and 2012, respectively.

Value Added Tax

All China-based enterprises are subject to a VAT imposed by the PRC government on their domestic product sales. The output VAT is charged to customers who purchase goods from the Company and the input VAT is paid when the Company purchases goods from its vendors. Input VAT rates are 13% for most of the purchasing activities conducted by the Company. Output VAT rate is 13% for chilled pork products, frozen pork products and vegetable and fruit products, and 17% for prepared meat products. The input VAT can be offset against the output VAT. The VAT payable or recoverable balance presented on the condensed consolidated balance sheets represents either the input VAT less than or larger than the output VAT. The debit balance represents a credit against future collections of output VAT instead of a receivable.

On a quarterly basis, the Company forecasts for each of its subsidiaries separately the amount of sales revenue necessary to fully utilize the VAT recoverable. Once the VAT recoverable for a subsidiary is determined to be non-recoverable in part or in full, the VAT recoverable is written off and booked as cost of goods sold or as impairment loss, depending on the nature of the event triggering the VAT write-off. The factors considered when evaluating to which account VAT recoverable is written off are as follows: i) if VAT is determined to be non-recoverable due to significant underperformance relative to expected historical or projected future operating results or negative industry or economic trend, VAT recoverable will be written-off to cost of goods sold, or ii) if VAT is determined to be non-recoverable due to significant changes in the strategy of the overall business, VAT recoverable would be written off as impairment loss. VAT write-off amounted to $1.9 million and nil for the three months ended March 31, 2013 and 2012, respectively.

Leases

The Company classified its leases at the inception date as either a capital lease or an operating lease. A lease is a capital lease if the following conditions exist: a) ownership is transferred to the lessee by the end of the lease term, b) there is a bargain purchase option, c) the lease term is at least 75% of the property's estimated remaining economic life or d) the present value of the minimum lease payments at the beginning of the lease term is 90% or more of the fair value of the leased property to the lessor at the inception date. A capital lease is accounted for as if there was an acquisition of an asset and an incurrence of an obligation at the inception of the lease. All other leases are accounted for as operating leases. In March 2013, the Company entered into a sale-leaseback agreement with CMB Financial Leasing Co., Ltd. ("CMB Leasing") to sell and lease back equipment. For details of the transaction, see Note 14, "Commitments and Contingencies".

Stock Compensation

The Company receives employee and certain non-employee services in exchange for (a) equity instruments of the Company or (b) liabilities that are based on the fair value of the Company's equity instruments or that may be settled by the issuance of such equity instruments. The Company accounts for stock compensation expense under the fair value recognition provisions of the FASB Accounting Standards Codification (ASC) Topic 718 (ASC 718), which requires companies to estimate the fair value of share-based payment awards on the date of grant using an option pricing model. See Note 10, "Equity Transactions", for further discussion on stock compensation expense.

Earnings Per Share

Basic earnings per share does not include dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution of securities that could share in the earnings of an entity, similar to fully-diluted earnings per share. Such shares are excluded if determined to be anti-dilutive. Of the 787,000 options outstanding at March 31, 2013, 514,000 options were anti-dilutive and therefore excluded from the computation of diluted earnings per share for the three months ended March 31, 2013. The number of shares of common stock underlying the outstanding stock warrants and options at March 31, 2013 and December 31, 2012 were 273,000 and 240,000, respectively, which were all included in the computation of diluted earnings per share.

Government Subsidies

The Company's subsidiaries in China receive government subsidies from local Chinese government agencies in accordance with relevant Chinese government policies. In general, the Company presents the government subsidies received as part of other income unless the subsidies received are earmarked to compensate a specific expense, which have been accounted for by offsetting the specific expense, such as interest expenses. Unearned government subsidies received are deferred for recognition until the criteria for such recognition could be met.

Research and Development Expenses

Research and development costs are expensed as incurred. The research and development expenses for the three-month periods ended March 31, 2013 and 2012 were $132,331 and $86,628, respectively. The Company did not receive government subsidies that were specified for supporting the Company's research and development efforts for the three-month periods ended March 31, 2013 and 2012.

Comprehensive Income (Loss)

The Company adopted FASB ASC 220, Comprehensive Income , which establishes standards for reporting and presentation of comprehensive income (loss) and its components in a full set of general-purpose financial statements. The Company has chosen to report comprehensive income (loss) in the statements of operations and comprehensive income. Comprehensive income (loss) is comprised of net income and all changes to shareholders' equity except those due to investments by owners and distributions to owners.

Recently Issued Accounting Pronouncements

In January 2013, the FASB issued Accounting Standards Update ("ASU") 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarified that the scope of ASU 2011-11, Disclosures about Offsetting Assets and Liabilities, would apply to derivatives including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or are subject to a master netting arrangement or similar agreement. This ASU is effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013. Retrospective presentation for all comparative periods presented is required. The adoption of ASU 2013-01 did not have a material impact on the Company's consolidated financial statements.

In February 2013, the FASB issued ASU 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, which superseded and replaced the presentation requirements for reclassifications out of accumulated other comprehensive income in ASUs 2011-05 (issued in June 2011) and 2011-12 (issued in December 2011) for all public and private organizations. The amendments would require an entity to provide additional information about reclassifications out of accumulated other comprehensive income. For public entities, the amendments are effective prospectively for reporting periods beginning after December 15, 2012, with early adoption permitted. The adoption of ASU 2013-02 did not have a material impact on the Company's consolidated financial statements.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Mar. 31, 2013	Dec. 31, 2012
CONDENSED CONSOLIDATED BALANCE SHEETS [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 6,666,258	$ 4,775,526
Other receivables, allowance for doubtful accounts	$ 509,084	$ 493,484
Common stock, par value	$ 0.001	$ 0.001
Common stock, authorized	100,000,000	100,000,000
Common stock, shares issued	40,376,182	40,376,182
Common stock, shares outstanding	37,209,344	37,209,344
Treasury stock, shares	3,166,838	3,166,838

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FAIR VALUE MEASUREMENT

3 Months Ended

Mar. 31, 2013

FAIR VALUE MEASUREMENT [Abstract]

FAIR VALUE MEASUREMENT

12. FAIR VALUE MEASUREMENT

The Company has adopted ASC Topic 820, Fair Value Measurement and Disclosure, which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. It does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. It establishes a three-level valuation hierarchy of valuation techniques based on observable and unobservable inputs, which may be used to measure fair value and include the following:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement.

The carrying value of financial items of the Company including cash and cash equivalents, restricted cash, other receivables, advance to vendors, accrued liabilities and short-term borrowings loans, approximate their fair values due to their short-term nature and are classified within Level 1 of the fair value hierarchy. The Company's financial items are classified within Level 1 of the fair value hierarchy. The carrying amount of cash and cash equivalents, accounts receivable, other receivables, advance to vendors, accounts payable, accrued liabilities, short-term financial bonds and short-term loans are reasonable estimates of their fair value because of the short term nature of these items.

The following table sets forth the Company's financial assets and liabilities not measured at fair value on a recurring basis and where they are classified within the hierarchy as of March 31, 2013:

	Total		Level 1		Level 2		Level 3
Capital leases	$	31,903,524		-	$	31,903,524		-
Note receivable	$	64,794,294		-	$	64,794,294		-
Long term loans	$	188,677,479		-	$	188,677,479		-

Note receivable approximates fair value since it bears interest at Shanghai interbank offered rate, as is normally charged for notes of similar nature. Long-term debt approximates fair value since the bank term loans are fixed rate instruments and bear interests at the rate dictated and published by the People's Bank of China. The current rates published by the People's Bank of China approximate the interest rates of the loans outstanding.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2013	May 06, 2013
Document And Entity Information Abstract
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Trading Symbol	HOGS
Entity Registrant Name	ZHONGPIN INC.
Entity Central Index Key	0001277092
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		37,209,344

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SEGMENT REPORTING

3 Months Ended

Mar. 31, 2013

SEGMENT REPORTING [Abstract]

SEGMENT REPORTING

13. SEGMENT REPORTING

The Company operates in only one segment: meat production. The Company's vegetable and fruit operations, both financially and operationally, do not represent a significant enough portion of its business to constitute a separate segment. However, the Company's product lines are divided into two divisions: pork and pork products, and vegetables and fruits.

The pork and pork products division is involved primarily in the processing of live hogs into fresh, frozen and processed pork products. The pork and pork products division markets its products domestically to retail stores and to food retailers, food service distributors, restaurant operators and noncommercial food service establishments, such as schools, hotel chains, healthcare facilities, the military and other food processors, as well as in certain international markets on a limited basis.

The vegetables and fruits division is involved primarily in the processing of fresh vegetables and fruits. The Company contracts with more than 100 farms in Henan province and nearby areas to produce high-quality vegetable varieties and fruits suitable for export purposes. The proximity of the contracted farms to operations ensures freshness from harvest to processing. The Company contracts with those farms to grow more than 25 categories of vegetables and fruits, including asparagus, sweet corn, broccoli, mushrooms, lima beans and strawberries.

	Sales by Division (U.S. dollars in millions) Three Months Ended March 31,
	2013			2012
	(Unaudited)			(Unaudited)
Pork and Pork Products:
Chilled Pork	$	243.1		$	248.8
Frozen Pork		58.6			67.0
Prepared Pork Products		78.4			55.7
Vegetables and Fruits		2.3			2.6
Total	$	382.4		$	374.1
Cost of Sales
Pork Products	$	341.9		$	336.4
Vegetables and Fruits		2.0			2.3
Gross Profit Margin:
Pork Products		10.0	%		9.4	%
Vegetables and Fruits		13.0	%		11.5	%

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Revenues
Sales revenues	$ 382,358,018	$ 374,127,384
Cost of sales	(343,913,400)	(338,651,649)
Gross profit	38,444,618	35,475,735
Operating expenses
General and administrative expenses	(11,117,768)	(9,416,975)
Selling expenses	(8,650,157)	(6,437,120)
Research and development expenses	(132,331)	(86,628)
Total operating expenses	(19,900,256)	(15,940,723)
Income from operations	18,544,362	19,535,012
Other income (expense)
Interest expenses, net	(8,289,066)	(7,625,481)
Other income, net	400,325	563,605
Government subsidies	776,718	915,348
Total other expense	(7,112,023)	(6,146,528)
Net income before taxes	11,432,339	13,388,484
Provision for income taxes	(811,687)	(1,193,329)
Net income after taxes	10,620,652	12,195,155
Net (income) loss attributable to non-controlling interests	(10,938)	2,160
Net income attributable to Zhongpin Inc. shareholders	10,609,714	12,197,315
Foreign currency translation adjustment	1,555,861	582,654
Foreign currency translation adjustment attributable to non-controlling interests	(2,337)	(863)
Foreign currency translation adjustment attributable to Zhongpin Inc. shareholders	1,553,524	581,791
Comprehensive income	12,176,513	12,777,809
Comprehensive (income) loss attributable to non-controlling interest	(13,275)	1,297
Comprehensive income attributable to Zhongpin Inc. shareholders	$ 12,163,238	$ 12,779,106
Basic earnings per common share	$ 0.29	$ 0.33
Diluted earnings per common share	$ 0.28	$ 0.33
Basic weighted average shares outstanding	37,209,344	37,498,563
Diluted weighted average shares outstanding	37,278,630	37,503,019

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SHORT-TERM BANK LOANS

3 Months Ended

Mar. 31, 2013

SHORT-TERM BANK LOANS [Abstract]

SHORT-TERM BANK LOANS

7. SHORT-TERM BANK LOANS

Short-term bank loans are due within one year. Of the $246.8 million and $176.4 million aggregate principal amount of short-term bank loans at March 31, 2013 and December 31, 2012, loans in the aggregate principal amount of $113.2 million and $116.1 million were guaranteed by the Company's subsidiaries in China, loans in the aggregate principal amount of $8.0 million and $8.0 million were secured by the land use right of the Company's subsidiaries in China, $111.2 million and $85.4 million aggregate principal amount of loans was credit loans, and loans in the aggregate principal amount of $14.4 million and $19.1 million were guaranteed by Henan Huanghe Enterprises Group Co., Ltd., an unaffiliated third party ("Huanghe Group"). These loans bear interest at prevailing lending rates in China ranging from 5.88 % to 7.20% per annum.

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CONSTRUCTION IN PROGRESS

3 Months Ended

Mar. 31, 2013

CONSTRUCTION IN PROGRESS [Abstract]

CONSTRUCTION IN PROGRESS

6. CONSTRUCTION IN PROGRESS

Construction in progress at March 31, 2013 and December 31, 2012 consisted of the following:

Construction Project	Date or Estimated Date Put in Service(1)	March 31, 2013		December 31, 2012
		(Unaudited)
Production facility for prepared pork products in Tianjin	February 2013	$	-	$	2,215,713
Upgrade for production facility in other locations	April 2013		36,211		375,627
Kunshan facility land preparation cost	April 2013		598,191		42,868,890
Upgrade for production facility in Anyang	May 2013		41,525,141		40,838,785
Improvement in Changge industrial park	July 2013		109,317		164,712
Production facility for chilled and frozen pork in Changchun (second phase)	November 2013		95,852		46,138
Research and development building in Changge	December 2013		3,828,423		-
Total		$	46,193,135	$	86,509,865

Estimated cost to complete current construction in progress is $9.3 million.

_______________

(1) Represents date all regulatory permits and approvals are received and project is placed in service. In certain cases, construction of a project may be substantially completed and the project may be operational during a testing period prior to such date.

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INVENTORIES (Tables)

3 Months Ended

Mar. 31, 2013

INVENTORIES [Abstract]

Schedule of Inventories

	March 31, 2013		December 31, 2012
	(Unaudited)
Raw materials	$	4,684,028	$	6,466,664
Low value consumables and packaging		1,568,000		1,685,431
Work-in-progress		4,202,916		3,955,169
Finished goods		24,145,075		25,871,962
Total	$	34,600,019	$	37,979,226

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2013

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

14. COMMITMENTS AND CONTINGENCIES

Mutual Guarantee

In May 2012, Henan Zhongpin entered into a mutual guarantee agreement with Huanghe Group, upon the expiration of a previous mutual guarantee agreement between Henan Zhongpin and Huanghe Group. Under the agreement, Henan Zhongpin agreed to guarantee bank loans of Huanghe Group in an amount up to $23.9 million and Huanghe Group agreed to guarantee Henan Zhongpin's bank loans in an amount up to $23.9 million. The agreement will expire in May 2013. At the expiration of the agreement, each party will remain obligated under its guarantee for any loans of the other party that are outstanding on the date of expiration of the agreement.

The business purpose for the mutual guarantee is to provide each party with a credit line from banks that would have otherwise been unavailable absent the guarantee. As bank credit loans are generally unavailable in China, companies are required to provide either a pledge of assets, a third-party guarantee or a combination of both in order to receive loans. In the case of pledges, companies can pledge their assets, including, among other things, land, buildings and machines, to banks as collateral to secure loans; however, banks generally will only loan up to 50% to 70% of the value of the pledged assets. Alternatively, if a company provides the banks with a guarantee agreement, the banks generally will loan up to 90% to 100% of the amount being guaranteed.

Henan Zhongpin's obligation as guarantor to repay loans on behalf of Huanghe Group will only arise if Huanghe Group cannot repay its loans and proceeds from liquidating Huanghe Group's pledged assets are insufficient to cover its outstanding debt. Henan Zhongpin's actual liability for such guarantee, should the guarantee obligation become due, will vary depending on the difference between the outstanding bank loan plus accrued interest and the proceeds received for the liquidated collateral. Henan Zhongpin did not pledge any of its assets in connection with the mutual guarantee agreement as this guarantee was not based on credit quality concerns, but rather based on the local banks' requirements. In the event Henan Zhongpin is required to pay all or a portion of any loans covered by the mutual guarantee, Henan Zhongpin would seek reimbursement for such payment from Huanghe Group.

At March 31, 2013, Henan Zhongpin had outstanding guarantees for $19.7 million of Huanghe Group's bank loans under the agreement. All of the bank loans guaranteed by Henan Zhongpin will mature within the next 12 months. As a result, the maximum potential amount of future payments (undiscounted) Henan Zhongpin could be obligated to make under the mutual guarantee at such date was $19.7 million. The Company did not record any liability on its balance sheet with respect to this mutual guarantee as the Company believes, based upon its continuing due diligence on Huanghe Group and its business, that Henan Zhongpin's liability there under remains contingent.

Legal Proceedings

On March 27, 2012, the Company announced that its Board of Directors had received a preliminary, non-binding proposal from the Company's Chairman and Chief Executive Officer, Xianfu Zhu, stating that Mr. Zhu intended to seek to purchase the remaining shares of the Company that he does not presently own (the "Proposed Buyout"). Following this announcement, at least three lawsuits have been filed in Delaware naming the members of the Company's Board of Directors and/or the Company as defendants. On November 26, 2012, the Company announced that it had entered into a definitive merger agreement with Golden Bridge Holdings Limited, a Cayman Islands exempted company ("Parent"), Golden Bridge Merger Sub Limited, a Delaware corporation and wholly owned subsidiary of Parent ("Merger Sub") and Mr. Xianfu Zhu, which was subsequently amended and restated on February 8, 2013 (the "Merger Agreement"). Pursuant to the Merger Agreement and subject to the satisfaction or waiver of the conditions to the transactions contemplated thereby, at the effective time of the merger, each share of the Company common stock issued and outstanding immediately prior to the effective time (other than shares owned by (i) Parent or Merger Sub, (ii) Mr. Xianfu Zhu, Mr. Baoke Ben, Mr. Chaoyang Liu, Mr. Qinghe Wang, Mr. Shuichi Si and Ms. Juanjuan Wang, (iii) the Company or any direct or indirect wholly-owned subsidiary of the Company or (iv) stockholders who have properly exercised and perfected appraisal rights under Delaware law), will be converted automatically into the right to receive $13.50 in cash, without interest. On March 15, 2013, the Company filed with the SEC a Schedule 13e-3 relating to the Proposed Buyout together with a preliminary proxy statement relating to a special meeting of stockholders to adopt the Merger Agreement (collectively, and together with all filings with the SEC that are ancillary thereto, and all amendments and supplements thereof, the "Transaction Filings").

Following the November 2012 announcement of the Merger Agreement, two additional lawsuits were filed in Delaware naming as defendants the members of the Company's Board of Directors, the Company, Parent, and Merger Sub. It is possible that more lawsuits will occur.

On April 3, 2012, a verified shareholder class action lawsuit was filed by Phillip Meeks in the Court of Chancery of the State of Delaware against the Company and members of its Board of Directors, alleging that, inter alia, the Company's Board of Directors breached their fiduciary duties in connection with the Proposed Buyout, and that the price per share proposed by Mr. Zhu represented inadequate consideration in light of the Company's intrinsic value and future prospects, and that the Company aided and abetted the breach of fiduciary duties. The plaintiff seeks damages, declaratory relief and injunctive relief, including an order preventing the Company from proceeding with the Proposed Buyout or any transaction with Mr. Zhu, as well as an award of plaintiffs' attorneys' fees and costs. The Company believes that none of the defendants has yet responded to the complaint.

On April 11, 2012, a verified shareholder class action lawsuit was filed by Richard Bauschard in the Court of Chancery of the State of Delaware against members of the Company's Board of Directors, alleging that, inter alia, the Board of Directors breached their fiduciary duties in connection with the Proposed Buyout, and that the price per share proposed by Mr. Zhu represented inadequate consideration in light of the Company's intrinsic value and future prospects. The plaintiff seeks damages, declaratory relief and injunctive relief, including an order preventing the defendants from proceeding with the Proposed Buyout or any transaction with Mr. Zhu, as well as an award of plaintiffs' attorneys' fees and costs. On April 12, 2013, plaintiff Richard Bauschard filed an amended complaint. The amended complaint names the same defendants and includes the same cause of action alleging breach of fiduciary duties, but the amended complaint includes additional allegations relating to the terms of the Merger Agreement and the disclosures contained in the preliminary proxy statement filed by the Company on March 15, 2013 with the SEC. The Company believes that none of the defendants has yet responded to the complaint.

On April 18, 2012, a verified shareholder class action lawsuit was filed by Harry Vonderlieth in the Court of Chancery of the State of Delaware against the Company and members of its Board of Directors, alleging that, inter alia, the Company's Board of Directors breached their fiduciary duties to the shareholders in connection with the Proposed Buyout, and that the price per share proposed by Mr. Zhu represented inadequate consideration in light of the Company's intrinsic value and future prospects, and that the Company aided and abetted the breach of fiduciary duties. The plaintiff seeks damages, declaratory relief and injunctive relief, including an order preventing the Company from proceeding with the Proposed Buyout or any transaction with Mr. Zhu, as well as an award of plaintiffs' attorneys' fees and costs. The Company believes that none of the defendants has yet responded to the complaint. On May 2, 2013, plaintiff Harry Vonderlieth voluntarily dismissed this case and the Court of Chancery of the State of Delaware granted the dismissal on May 3, 2013.

On December 4, 2012, after the announcement of the Company's entering into the Merger Agreement, a verified shareholder class action lawsuit was filed by Ernesto Rodriguez in the Court of Chancery of the State of Delaware against the Company and members of its Board of Directors, Parent and Merger Sub, alleging that, inter alia, the Company's Board of Directors breached their fiduciary duties to the Company's shareholders in connection with the Proposed Buyout and the Merger Agreement, and that the price per share and other terms provided for in the Merger Agreement are inadequate and unfair in light of the Company's intrinsic value and future prospects, and that the Company, Parent and Merger Sub aided and abetted the breach of fiduciary duties. The plaintiff seeks damages, declaratory relief and injunctive relief, including an order preventing the Company from proceeding with the Proposed Buyout or any transaction with Mr. Zhu, as well as an award of plaintiffs' attorneys' fees and costs. On or about February 6, 2013, the plaintiff served document discovery on the individual defendants. On April 12, 2013, plaintiff Ernesto Rodriguez filed an amended complaint. The amended complaint names the same defendants and includes the same cause of action alleging breach of fiduciary duties, but the amended complaint includes additional allegations relating to the disclosures contained in the preliminary proxy statement filed by the Company on March 15, 2013 with the SEC. The Company believes that none of the defendants has yet responded to the complaint or the discovery served by the plaintiff.

On April 23, 2013, after the announcement of the Company's entering into the Merger Agreement and certain of the Transaction Filings were made, a verified shareholder class action lawsuit was filed by Alan Hall in the Court of Chancery of the State of Delaware against the Company and members of its Board of Directors, Parent and Merger Sub, alleging that, inter alia, the Company's Board of Directors breached their fiduciary duties to the Company's shareholders in connection with the Proposed Buyout and the Merger Agreement, and that the price per share and other terms provided for in the Merger Agreement are inadequate and unfair in light of the Company's intrinsic value and future prospects, that the Transaction Filings contain materially misleading misstatements and omissions, and that the Company, Parent and Merger Sub aided and abetted the breach of fiduciary duties. The plaintiff seeks damages, declaratory relief and injunctive relief, including an order preventing the Company from proceeding with the Proposed Buyout, or any transaction with Mr. Zhu, as well as an award of plaintiffs' attorneys' fees and costs. The Company believes that none of the defendants has yet responded to the complaint.

On or about April 22, 2013, plaintiff Richard Bauschard filed a motion to consolidate and appoint lead counsel with the Court of Chancery of the State of Delaware, moving the Court for an order providing for (i) the consolidation of the aforesaid lawsuits filed by Phillip Meeks, Richard Bauschard, Harry Vonderlieth and Ernesto Rodriguez, and (ii) the appointment of lead counsel and Delaware liaison counsel in the consolidated matter. The Company believes that none of the defendants has yet responded to the motion.

The Company intends to defend against the pending class action litigation vigorously.

In accordance with accounting standards regarding loss contingencies, the Company accrues an undiscounted liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated, and the Company discloses the amount accrued and an estimate of any reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for the Company's financial statements not to be misleading. The Company does not accrue liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated, or when the liability is believed to be only reasonably possible or remote.

Because litigation outcomes are inherently unpredictable, the evaluation of legal proceedings often involves a series of complex assessments by management about future events and can rely heavily on estimates and assumptions. If the assessments indicate that loss contingencies that could be material to any one of the Company's financial statements are not probable, but are reasonably possible, or are probable, but cannot be estimated, then the Company discloses the nature of the loss contingencies, together with an estimate of the possible loss or a statement that such loss is not reasonably estimable.

With respect to the legal proceedings and claims described above, such litigation is still in its preliminary stages and the final outcome, including the Company's liability, if any, with respect to such litigation, is uncertain. At present, the Company is unable to estimate a reasonably possible range of loss, if any, that may result from such litigation. If an unfavorable outcome were to occur in the litigation described above, the impact could be material to the Company's business, financial condition, or results of operations.

In addition, it is not possible to determine the maximum potential amount under the indemnification provisions under the terms and conditions of applicable bylaws, certificates or articles of incorporation, agreements or applicable law due to the limited history of prior indemnification claims and the preliminary stages of the litigation.

Capital Leases

In March 2013, Henan Zhongpin entered into a sale-leaseback agreement with CMB Leasing pursuant to which Henan Zhongpin sold to CMB Leasing equipment with a net book value of $47.6million for $43.8 million and leased such equipment back. The lease payments for this equipment are paid on a quarterly basis over a four-year period and consist of a fixed payment based upon a 48-month amortization of the purchase price plus an interest component that is based upon the rate announced from time to time by the People's Bank of China for three-year loans. At March 31, 2013, the quarterly rental fee under the agreement was $2,246,214, which included an interest component calculated at the rate of 5.82% and adjustable in the quarter following any rate adjustments published by the People's Bank of China. The sale-leaseback agreement will end in March 2017. Henan Zhongpin has the right to repurchase all of the equipment under the sale-leaseback agreement for a nominal purchase price at the end of the lease term. The sale-leaseback agreement was guaranteed by Mr. Xianfu Zhu, the Company's Chairman and Chief Executive Officer.

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EQUITY TRANSACTIONS

3 Months Ended

Mar. 31, 2013

EQUITY TRANSACTIONS [Abstract]

EQUITY TRANSACTIONS

10. EQUITY TRANSACTIONS

During the three months ended March 31, 2013 and 2012, the stock-based compensation expenses were nil and $417,749, respectively.

During the three months ended March 31, 2013 and 2012, no warrants or options were exercised.

During the three months ended March 31, 2013 and 2012, the Company repurchased nil and 368,300 shares of common stock from the public market, respectively. The average cost per share, including commission, was $8.4023 for repurchased shares for the three months ended March 31, 2012.

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SHORT-TERM BONDS

3 Months Ended

Mar. 31, 2013

SHORT-TERM BONDS [Abstract]

SHORT TERM BONDS

8. SHORT-TERM BONDS

In March 2013, Henan Zhongpin issued RMB600 million (approximately US$95.7 million) aggregate principal amount of 5.15% unsecured non-convertible one-year bonds which will mature and be repaid on March 27, 2014.

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LONG-TERM BANK LOANS

3 Months Ended

Mar. 31, 2013

LONG-TERM BANK LOANS [Abstract]

LONG-TERM BANK LOANS

9. LONG-TERM BANK LOANS

Amounts outstanding under the Company's long-term debt arrangements at March 31, 2013 and December 31, 2012 were as follows:

Bank	March 31, 2013			December 31, 2012
	(Unaudited)
China Construction Bank	$	24,725,231		$	24,659,932
Agriculture Bank of China		101,453,205			76,525,336
Canadian Government Transfer Loan		1,052,087			1,052,087
China Merchants Bank		11,963,821			11,932,225
China Development Bank		47,855,286			38,183,120
Changge Old Town		1,627,849			1,623,549
Total long-term loan		188,677,479			153,976,249
Current portion		(45,303,004	)		(52,183,597	)
Total long-term portion	$	143,374,475		$	101,792,652

In March 2013, Henan Zhongpin entered into a loan agreement with China Construction Bank pursuant to which Henan Zhongpin borrowed RMB 20 million ($3.2 million). All amounts borrowed under the loan agreement bear interest at a fixed rate of 6.15% and are payable in March 2015. Borrowings under the loan agreement are secured by land use rights, property and plant of Henan Zhongpin.

In March 2013, Henan Zhongpin entered into a loan agreement with the Agriculture Bank of China pursuant to which Henan Zhongpin borrowed RMB 100 million ($16.0 million). All amounts borrowed under the loan agreement bear interest at a floating rate that is based on the prime rate published by the People's Bank of China for loans with the same or similar terms on the drawdown date (6.46% per annum on March 31, 2013 and adjustable on each anniversary of the agreement based on the prime rate published by the People's Bank of China for loans with the same or similar terms) and are payable in installments on various scheduled repayment dates between June 2013 and March 2016. Borrowings under the loan agreement are secured by the land use rights, property and plant of Henan Zhongpin.

In January 2013, Taizhou Zhongpin entered into a loan agreement with the Agriculture Bank of China pursuant to which Taizhou Zhongpin may borrow up to RMB 180 million ($28.7 million). Taizhou Zhongpin drew down RMB 44 million ($7.0 million) in January 2013 and RMB 120 million ($19.1 million) in March 2013. All amounts borrowed under the loan agreement bear interest at a floating rate that is based on the prime rate published by the People's Bank of China for loans with the same or similar terms on the drawdown date (7.04% per annum on March 31, 2013 and adjustable on each anniversary of the agreement based on the prime rate published by the People's Bank of China for loans with the same or similar terms) and RMB 164 million ($26.2 million) are payable in installments on various scheduled repayment dates between January 2014 and January 2018. Borrowings under the loan agreement are guaranteed by Henan Zhongpin and secured by land use rights of Taizhou Zhongpin.

In April 2012, Changchun Zhongpin entered into a loan agreement with China Development Bank pursuant to which Changchun Zhongpin may borrow up to RMB 300 million ($47.9 million). Changchun Zhongpin drew down RMB 125 million ($19.9 million) in April 2012, RMB 76 million ($12.1 million) in July 2012, RMB39 million ($6.2 million) in October 2012 and RMB 60 million ($9.6 million) in February 2013. All amounts borrowed under the loan agreement bear interest at a floating rate that is based on the prime rate published by the People's Bank of China for loans with the same or similar terms on the drawdown date (7.21% per annum on March 31, 2013 and adjustable immediately following the publishing of rate adjustments by the People's Bank of China during the term of the loan) and are payable in installments on various scheduled repayment dates between April 2013 and May 2020. Borrowings under the loan agreement are guaranteed by Henan Zhongpin and secured by all of Henan Zhongpin's equity interests in Tianjin Zhongpin and Yongcheng Zhongpin.

In April 2012, Henan Zhongpin entered into a loan agreement with China Construction Bank pursuant to which Henan Zhongpin borrowed RMB 15 million ($2.4 million). All amounts borrowed under the loan agreement bear interest at a floating rate that is based on the prime rate published by the People's Bank of China for loans with the same or similar terms on the drawdown date (6.65% per annum on March 31, 2013 and adjustable on each anniversary of the agreement based on the prime rate published by the People's Bank of China for loans with the same or similar terms) and are payable in March 2014. Borrowings under the loan agreement are secured by the land use rights, property and plant of Yongcheng Zhongpin.

In March 2012, Henan Zhongpin entered into a loan agreement with China Construction Bank pursuant to which Henan Zhongpin borrowed RMB 50 million ($8.0 million). All amounts borrowed under the loan agreement bear interest at a floating rate that is based on the prime rate published by the People's Bank of China for loans with the same or similar terms on the drawdown date (6.65% per annum on March 31, 2013 and adjustable on each anniversary of the agreement based on the prime rate published by the People's Bank of China for loans with the same or similar terms) and are payable in March 2014. Borrowings under the loan agreement are secured by the land use rights, property and plant of Yongcheng Zhongpin.

In June 2011, Henan Zhongpin entered into a loan agreement with China Construction Bank pursuant to which Henan Zhongpin borrowed RMB 50 million ($8.0 million). All amounts borrowed under the loan agreement bear interest at a floating rate that is based on the prime rate published by the People's Bank of China for loans with the same or similar terms on the drawdown date (6.08% per annum on March 31, 2013 and adjustable on each anniversary of the agreement based on the prime rate published by the People's Bank of China for loans with the same or similar terms) and are payable in installments in March and June 2013. Borrowings under the loan agreement are secured by the land use rights, property and plant of Henan Zhongpin. Henan Zhongpin has repaid $3.2 million in March 2013, and $4.8 million remained outstanding as of March 31, 2013.

In September 2010, Henan Zhongpin entered into a loan agreement with the Agriculture Bank of China pursuant to which Henan Zhongpin borrowed RMB 75 million ($12.0 million). All amounts borrowed under the loan agreement bear interest at a floating rate that is based on the prime rate published by the People's Bank of China for loans with the same or similar terms on the drawdown date (6.40% per annum on March 31, 2013 and adjustable in the month immediately following the publishing of rate adjustments by the People's Bank of China during the term of the loan) and are payable in installments on various scheduled repayment dates between September 2011 and December 2014. Borrowings under the loan agreement are guaranteed by Zhumadian Zhongpin. Henan Zhongpin has repaid an aggregate of $0.7 million, and $11.3 million remained outstanding as of March 31, 2013.

In July 2010, Tianjin Zhongpin entered into a loan agreement with the Agriculture Bank of China pursuant to which Tianjin Zhongpin may borrow up to RMB 300 million ($47.9 million). Tianjin Zhongpin drew down RMB 50 million ($8.0 million) in July 2010, RMB 80 million ($12.8 million) in November 2010 and RMB 110 million ($17.5 million) in May 2011. As of March 31, 2013, the total outstanding balance under the agreement was $38.3 million and Tianjin Zhongpin had $9.6 million available for borrowing under the loan agreement. All amounts borrowed under the loan agreement bear interest at a floating rate that is based on the prime rate published by the People's Bank of China for loans with the same or similar terms on the drawdown date (6.40% per annum on March 31, 2013 and adjustable in the month immediately following the publishing of rate adjustments by the People's Bank of China during the term of the loan) and are payable in installments in June 2013, 2014 and 2015. Borrowings under the loan agreement are secured by the land use rights, property and plant of Tianjin Zhongpin.

In June 2010, Henan Zhongpin entered into a loan agreement with China Construction Bank pursuant to which Henan Zhongpin borrowed RMB 40 million ($6.4 million). All amounts borrowed under the loan agreement bear interest at a floating rate that is based on the prime rate published by the People's Bank of China for loans with the same or similar terms on the drawdown date (5.76% per annum on March 31, 2013 and adjustable on each anniversary of date of the agreement based on the prime rate published by the People's Bank of China for loans with the same or similar terms) and are payable on June 29, 2013. Borrowings under the loan agreement are secured by the land use rights, property and plant of Henan Zhongpin.

In April 2010, in connection with the purchase of a piece of land from Changge Old Town, Changge Old Town extended a loan to Henan Zhongpin with a principal amount of RMB 10.2 million ($1.6 million) and bearing interest at the rate of 7.00% per annum payable on June 30, 2010 and each anniversary thereafter. Such loan does not have a fixed term and the principal amount of the loan should be repaid by Henan Zhongpin upon six months prior written notice from Changge Old Town. The full amount of the loan remained outstanding as of March 31, 2013.

In December 2009, Henan Zhongpin entered into a loan agreement with the Agriculture Bank of China pursuant to which Henan Zhongpin borrowed RMB 70 million ($11.2 million). All amounts borrowed under the loan agreement bear interest at a floating rate that is based on the prime rate published by the People's Bank of China for loans with the same or similar terms on the drawdown date (6.40% per annum on March 31, 2013 and adjustable in the month immediately following the publishing of rate adjustments by the People's Bank of China during the term of the loan) and are payable in installments on various scheduled repayment dates between December 2010 and December 2014. Borrowings under the loan agreement are secured by the land use rights, property and plant of Luoyang Zhongpin. Henan Zhongpin has repaid an aggregate of $1.5 million, and $9.7 million remained outstanding as of March 31, 2013.

In November 2009, Henan Zhongpin entered into a loan agreement with China Merchants Bank pursuant to which Henan Zhongpin borrowed RMB 95 million ($15.2 million). The first 50% of the loan was drawn down in November 2009 and the remaining 50% of the loan was drawn down in March 2010. All amounts borrowed under the loan agreement bear interest at a floating rate that is based on the prime rate published by the People's Bank of China for loans with the same or similar terms on the drawdown date (6.40% per annum on March 31, 2013 and adjustable in the month immediately following the publishing of rate adjustments by the People's Bank of China during the term of the loan) and are payable in installments on various scheduled repayment dates between November 2012 and November 2014. Borrowings under the loan agreement are guaranteed by Luoyang Zhongpin.

In May 2002, Henan Zhongpin entered into a loan agreement with the Bank of Communications, Zhengzhou Branch, which is the intermediary bank for a 40-year term loan in the amount of $2,504,969 from the Canadian government. Under the terms of the loan agreement, 58% of the principal amount ($1,452,882) of this loan bears interest at the fixed rate of 6.02% per annum and remaining principal amount of this loan is interest free. The loan is repayable in a fixed amount of $42,083, which includes both principal and interest, that is payable on a semi-annual basis through November 15, 2041. Borrowings under the loan agreement are guaranteed by the Financing Department of Henan province.

Of the $435.5 million short-term and long-term loans outstanding as of March 31, 2013, $134,154,317 are secured by land use rights and property, plant and equipment of the Company's subsidiaries. The total amount of land use rights and property, plant and equipment pledged was $191,620,720 as of March 31, 2013.

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EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2013

EARNINGS PER SHARE [Abstract]

EARNINGS PER SHARE

11. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted net earnings per share for the periods indicated:

	Three Months Ended March 31,
	2013		2012
	(Unaudited)		(Unaudited)
Numerator:
Net income attributable to common shares	$	10,609,714	$	12,197,315
Denominator:
Weighted average number of common shares outstanding - basic		37,209,344		37,498,563
Dilutive effect of stock options		69,286		4,456
Weighted average number of common shares outstanding - diluted		37,278,630		37,503,019
Basic earnings per share	$	0.29	$	0.33
Diluted earnings per share	$	0.28	$	0.33

Of the 787,000 options and warrants outstanding at March 31, 2013, 514,000 options were anti-dilutive and therefore excluded from the computation of diluted earnings per share for the three months ended March 31, 2013. 273,000 options and warrants were dilutive and therefore included in the computation of diluted earnings per share for the three months ended March 31, 2013.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Estimated Useful Lives of Property, Plant and Equipment) (Details)	3 Months Ended
	Mar. 31, 2013
Plant and buildings [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated Useful Economic Life	5 years
Plant and buildings [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated Useful Economic Life	30 years
Machinery and equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated Useful Economic Life	5 years
Machinery and equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated Useful Economic Life	20 years
Office furniture and equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated Useful Economic Life	3 years
Office furniture and equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated Useful Economic Life	5 years
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Estimated Useful Economic Life	5 years

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ORGANIZATION AND NATURE OF OPERATIONS (Tables)

3 Months Ended

Mar. 31, 2013

ORGANIZATION AND NATURE OF OPERATIONS [Abstract]

Schedule of China-based Subsidiaries

Name	Date of Incorporation		Registered/Authorized Capital	Percentage of Ownership
Henan Zhongpin Food Company Limited		May 20, 2005	$203,300,000		100	%
Henan Zhongpin Food Share Company Limited ("Henan Zhongpin")		Jan. 20, 2000	1,430,000,000 RMB ($219,699,181)		100	%(1)
Henan Zhongpin Import and Export Trading Company Limited		Aug. 11, 2004	5,060,000 RMB ($611,111)		100	%
Zhumadian Zhongpin Food Company Limited ("Zhumadian Zhongpin")		June 7, 2006	60,000,000 RMB ($8,585,398)		100	%
Anyang Zhongpin Food Company Limited		Aug. 21, 2006	34,800,000 RMB ($5,094,422)		100	%
Henan Zhongpin Fresh Food Logistics Company Limited		Sept. 14, 2006	1,500,000 RMB ($189,665)		100	%
Deyang Zhongpin Food Company Limited		Sept. 25, 2006	15,000,000 RMB ($1,893,652)		100	%
Henan Zhongpin Business Development Company Limited		Sept. 27, 2006	5,000,000 RMB ($632,215)		100	%
Luoyang Zhongpin Food Company Limited ("Luoyang Zhongpin")		Jan. 18, 2007	60,000,000 RMB ($8,703,452)		100	%
Yongcheng Zhongpin Food Company Limited ("Yongcheng Zhongpin")		Mar. 1, 2007	60,000,000 RMB ($8,783,487)		100	%
Tianjin Zhongpin Food Company Limited ("Tianjin Zhongpin")		Sept. 14, 2007	100,000,000 RMB ( $14,639,145 )		100	%

Name	Date of Incorporation		Registered/Authorized Capital	Percentage of Ownership
Jilin Zhongpin Food Company Limited		Dec. 11, 2008	1,000,000 RMB ($145,688)		100	%
Henan Zhongpin Agriculture and Animal Husbandry Industry Development Company Limited		Dec. 26, 2008	10,000,000 RMB ($1,461,796)		100	%
Taizhou Zhongpin Food Company Limited ("Taizhou Zhongpin")		May 12, 2010	100,000,000 RMB ($15,872,008)		100	%
Changchun Zhongpin Food Company Limited ("Changchun Zhongpin")		Aug. 6, 2010	170,000,000 RMB ($26,292,994)		100	%
Henan Zhongpin Xinda Agriculture and Animal Husbandry Company Limited		Jun. 1, 2011	15,000,000 RMB ($2,287,841)		65	%
Kunshan Zhongpin Cold Chain Logistics Company Limited		Jun. 3, 2011	300,000,000 RMB ($46,356,388)		100	%
Tangshan Zhongpin Food Company Limited		Nov. 15, 2011	5,000,000 RMB ($788,196)		100	%
Zhongpin (Hong Kong) Trading Co., Limited		Sept. 11, 2012	$1,000,000		100	%
Tianjin Jinghui Hogs Breeding Company Limited		Nov.12, 2012	1,000,000RMB ($158,700)		100	%

(1) Includes a 1.19% ownership interest of another six stockholders with respect to which Henan Zhongpin Food Company Limited is entitled to all economic benefits and the right to vote pursuant to the terms of a trust agreement with such stockholders.

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CONSTRUCTION IN PROGRESS (Tables)

3 Months Ended

Mar. 31, 2013

CONSTRUCTION IN PROGRESS [Abstract]

Schedule of Construction in Progress

Construction Project	Date or Estimated Date Put in Service(1)	March 31, 2013		December 31, 2012
		(Unaudited)
Production facility for prepared pork products in Tianjin	February 2013	$	-	$	2,215,713
Upgrade for production facility in other locations	April 2013		36,211		375,627
Kunshan facility land preparation cost	April 2013		598,191		42,868,890
Upgrade for production facility in Anyang	May 2013		41,525,141		40,838,785
Improvement in Changge industrial park	July 2013		109,317		164,712
Production facility for chilled and frozen pork in Changchun (second phase)	November 2013		95,852		46,138
Research and development building in Changge	December 2013		3,828,423		-
Total		$	46,193,135	$	86,509,865

Estimated cost to complete current construction in progress is $9.3 million.

_______________

(1) Represents date all regulatory permits and approvals are received and project is placed in service. In certain cases, construction of a project may be substantially completed and the project may be operational during a testing period prior to such date.

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SEGMENT REPORTING (Schedule of Sales by Division) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Segment Reporting Information [Line Items]
Sales revenues	$ 382,358,018	$ 374,127,384
Cost of sales	343,913,400	338,651,649
Chilled Pork [Member]
Segment Reporting Information [Line Items]
Sales revenues	243,100,000	248,800,000
Frozen Pork [Member]
Segment Reporting Information [Line Items]
Sales revenues	58,600,000	67,000,000
Prepared Pork Products [Member]
Segment Reporting Information [Line Items]
Sales revenues	78,400,000	55,700,000
Pork Products [Member]
Segment Reporting Information [Line Items]
Cost of sales	341,900,000	336,400,000
Gross Profit Margin	10.00%	9.40%
Vegetables and Fruits [Member]
Segment Reporting Information [Line Items]
Sales revenues	2,300,000	2,600,000
Cost of sales	$ 2,000,000	$ 2,300,000
Gross Profit Margin	13.00%	11.50%

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SHORT-TERM BONDS (Details)	3 Months Ended
	Mar. 31, 2013 USD ($)	Mar. 31, 2013 CNY
SHORT-TERM BONDS [Abstract]
Bond, principal amount	$ 95,700,000	600,000,000
Short term bond interest rate	5.15%	5.15%
Bond, maturity date	Mar. 27, 2014	Mar. 27, 2014

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Cash flows from operating activities:
Net income	$ 10,620,652	$ 12,195,155
Adjustments to reconcile net income to net cash used in operations:
Depreciation	5,899,289	5,537,984
Amortization of land use rights	644,802	516,966
Provision for allowance for bad debts	1,889,563	1,657,949
Other income	(88,790)	(129,699)
Deferred subsidy	(21,236)
Stock-based compensation		417,749
Changes in operating assets and liabilities:
Accounts receivable	(37,228,084)	(31,521,161)
Other receivables	(124,907)	(950,981)
Purchase deposits	(218,259)	1,489,444
Prepaid expenses	60,153	75,128
Inventories	3,474,455	(13,251,435)
Allowance receivables		2,160,068
VAT recoverable	(602,931)	(5,225,549)
Other current assets	(2,023)	(118,029)
Deferred charges		1,855
Accounts payable	1,546,201	28,643,061
Other payables	(318,966)	(2,035,430)
Accrued liabilities	933,980	388,216
Taxes payable	(400,248)	373,669
Deposits from customers	(2,614,682)	(3,541,776)
Deposits from customers - Long term portion		(338,991)
Net cash used in operating activities	(16,551,031)	(3,655,807)
Cash flows from investing activities:
Deposits for purchase of land use rights		(10,555,624)
Construction in progress	(5,413,842)	(11,461,585)
Additions to property and equipment	(2,267,416)	(2,585,772)
Additions to land use rights	(21,559)
Proceeds on sale of fixed assets		5,905
Net cash used in investing activities	(7,702,817)	(24,597,076)
Cash flows from financing activities:
Proceeds from (repayment of) bank notes, net	(39,447,085)	9,806,307
Proceeds from short-term bank loans	60,524,010	88,785,573
Repayment of short-term bank loans	(43,003,902)	(49,538,008)
Proceeds from long-term loans	54,790,156	7,926,069
Repayment of long-term loans	(20,549,090)
Proceeds from short-term financial bonds, net of issuance costs	95,181,970
Proceeds from capital lease obligation, net of issuance costs	29,529,346
Repayment of capital lease obligation		(1,498,250)
Repurchase of common stock		(2,812,322)
Increase in restricted cash	4,371,725
Net cash provided by financing activities	141,397,130	52,669,369
Effect of rate changes on cash	730,560	226,450
Increase in cash and cash equivalents	117,873,842	24,642,936
Cash and cash equivalents, beginning of period	176,441,332	135,845,095
Cash and cash equivalents, end of period	294,315,174	160,488,031
Supplemental disclosures of cash flow information:
Cash paid for interest	9,596,014	8,122,027
Cash paid for income taxes	$ 1,199,986	$ 819,660

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LAND USE RIGHTS

3 Months Ended

Mar. 31, 2013

LAND USE RIGHTS [Abstract]

LAND USE RIGHTS

5. LAND USE RIGHTS

The Company's land use rights at March 31, 2013 and December 31, 2012 are as follows:

	March 31, 2013			December 31, 2012
	(Unaudited)
Land use rights	$	127,278,183		$	124,983,885
Accumulated amortization		(8,865,613	)		(8,198,116	)
Total	$	118,412,570		$	116,785,769

The amortization expenses for the three months ended March 31, 2013 and 2012 were $644,802 and $516,966, respectively.

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LONG-TERM BANK LOANS (Tables)

3 Months Ended

Mar. 31, 2013

LONG-TERM BANK LOANS [Abstract]

Schedule of Long-term Bank Loans

Bank	March 31, 2013			December 31, 2012
	(Unaudited)
China Construction Bank	$	24,725,231		$	24,659,932
Agriculture Bank of China		101,453,205			76,525,336
Canadian Government Transfer Loan		1,052,087			1,052,087
China Merchants Bank		11,963,821			11,932,225
China Development Bank		47,855,286			38,183,120
Changge Old Town		1,627,849			1,623,549
Total long-term loan		188,677,479			153,976,249
Current portion		(45,303,004	)		(52,183,597	)
Total long-term portion	$	143,374,475		$	101,792,652

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LAND USE RIGHTS (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
LAND USE RIGHTS [Abstract]
Land use rights	$ 127,278,183		$ 124,983,885
Accumulated amortization	(8,865,613)		(8,198,116)
Total	118,412,570		116,785,769
Amortization of land use rights	$ 644,802	$ 516,966

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policy)

3 Months Ended

Mar. 31, 2013

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Consolidation and Basis of Presentation

Consolidation and Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of Zhongpin Inc. and its subsidiaries (collectively referred to herein as the "Company"). All significant intercompany accounts and transactions have been eliminated during the process of consolidation. The condensed consolidated financial statements were prepared in accordance with GAAP for interim financial information.

Non-controlling interests

Non-controlling Interests

Effective July 1, 2009, the Company adopted the authoritative pronouncement issued by the Financial Accounting Standards Board (the "FASB") regarding non-controlling interests in consolidated financial statements. The pronouncement requires non-controlling interests to be separately presented as a component of equity in the consolidated financial statements.

Foreign Currency Translations and Transactions

Foreign Currency Translations and Transactions

RMB, the national currency of China, is the primary currency that the Company's China-based subsidiaries use. The United States dollar ("U.S. dollar") is the functional currency used by Falcon and Zhongpin Inc. to record all of their activities. The Company uses the U.S. dollar for financial reporting purposes.

The Company translates assets and liabilities into U.S. dollars using the middle rate published by the People's Bank of China as of the balance sheet date. The condensed consolidated statement of income is translated at average rates during the reporting period. Adjustments resulting from the translation of financial statements from RMB into U.S. dollars are recorded in stockholders' equity as part of accumulated comprehensive loss - translation adjustments. Gains or losses resulting from transactions in currencies other than RMB are reflected in income for the reporting period.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Certain accounting principles require subjective and complex judgments to be used in the preparation of financial statements. Accordingly, a different financial presentation could result depending on the judgments, estimates, or assumptions that are used. Such estimates and assumptions include, but are not specifically limited to, those required in the valuation of long-lived assets, allowance for doubtful accounts, reserves for inventory obsolescence, valuation allowances for value added tax ("VAT") recoverable, deferred tax assets and determination of stock based compensation.

Revenue Recognition

Revenue Recognition

Revenues generated from the sales of various meat products and vegetables and fruits are recognized when these products are delivered to customers in accordance with previously agreed upon pricing and delivery arrangements, and the collectability of these sales is reasonably assured. Since the products sold by the Company are primarily perishable and frozen food products, the right of return is only valid for a few days and has been determined to be insignificant by the management of the Company. Accordingly, no provision has been made for returnable goods. Revenues presented on the consolidated statements of operations and comprehensive income are net of sales taxes.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly-liquid investments with maturity of three months or less to be cash equivalents. The Company maintains its cash accounts at creditworthy financial institutions and closely monitors the movements of its cash positions.

Restricted Cash and Bank Notes Payable

Restricted Cash and Bank Notes Payable

Under the terms of the credit agreements with certain of its lenders, Henan Zhongpin has agreed to maintain with such lenders an amount of cash that will serve as collateral for its delivery of such lenders' bank promissory notes. The amount of bank promissory notes that are to be delivered by Henan Zhongpin to such lenders can be up to twice the amount of such deposits. As such deposits may not be withdrawn by Henan Zhongpin without restriction, such cash deposits are presented as "restricted cash" on the consolidated balance sheets.

Bank Notes Receivable

Bank Notes Receivable

The Company only accepts notes issued by banks in the normal course of business as payment for products sold by the Company. These bank notes receivable have maturity dates of up to 180 days and bear no interest. In addition, the Company may also acquire bank notes receivable, with maturity of less than six months, from third parties, at a lower cost compared to the face value of the bank notes, so as to earn the interest.

The Company can hold these bank notes until the maturity date and collect the amount from the issuing banks, or the Company can use these bank notes as means for payment for goods or services received. The Company accrues no provision for these bank notes because such bank notes have little risk of default in China.

Accounts Receivable

Accounts Receivable

During the normal course of business, the Company's policy is to ask customers to make deposits in reasonable and meaningful amounts on a case-by-case basis. For certain customers, the Company may extend unsecured credit.

The Company regularly evaluates and monitors the creditworthiness of each of its customers in accordance with the prevailing practice in the meat industry and based on general economic conditions in China. The Company maintains a general policy of providing 100% allowance for doubtful accounts in an amount equal to the aggregate amount of those accounts that are not collected within one year plus an amount equal to 5% of the aggregate amount of accounts receivable less than one year old. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. The Company also examines the credit terms of significant customers regularly and asks for more cash deposits if these customers appear to have any indicators of delaying their payments to the Company. Such deposits are usually applied for the collection of the outstanding accounts receivable during the year. With such a practice in place, the Company did not have any specific allowance for doubtful accounts provided against specific customers at March 31, 2013 and December 31, 2012, respectively.

The following table presents allowance activities in accounts receivable.

	March 31, 2013		December 31, 2012
Beginning balance	$	4,775,526	$	2,323,920
Additions to allowance for bad debt		1,875,215		2,478,601
Exchange difference		15,517		(26,995	)
Ending balance	$	6,666,258	$	4,775,526

Inventories

Inventories

Inventories are comprised of raw materials and low-value consumables, work-in-progress, and finished goods. Inventories are stated at the lower of cost or market-based prices according to the weighted average method. Production cost components include the purchase cost of live hogs, direct labor, depreciation, packaging material, utility expense and other manufacturing overhead. By using a systematic costing system, the production cost is allocated to various products at the stage of work-in-progress and finished goods, respectively. Net realizable value is the estimated selling price, in the ordinary course of business, less estimated costs to complete and dispose. The Company regularly inspects the shelf life of prepared foods and, if necessary, write down their carrying value based on their salability and expiration dates as cost of goods sold.

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant and equipment are recorded at cost and are stated net of accumulated depreciation. Depreciation expense is determined using the straight-line method over the estimated useful lives of the assets. Leased properties under capital leases are also amortized over the estimated useful life of the property due to the transfer of ownership or availability of bargain purchase option at the end of the lease term. Estimated useful lives of the assets are as follows:

	Estimated Useful Economic Life
Plants and buildings	5-30 years
Machinery and equipment	5-20 years
Office furniture and equipment	3-5 years
Vehicles	5 years

Maintenance and repairs are charged directly to expense as incurred, whereas improvements and renewals are generally capitalized in their respective property accounts. When an item is retired or otherwise disposed of, the cost and applicable accumulated depreciation are removed and the resulting gain or loss is recognized and reflected as a line item under other income (expenses).

Land Use Rights

Land Use Rights

The Chinese government owns all of the parcels of land on which the Company's plants are built. In China, land use rights for commercial purposes are granted by the PRC government typically for a term of 40-50 years. The Company is required to pay a lump sum of money to the State Land and Resource Ministry of the applicable locality to acquire such rights. The Company capitalizes the lump sum of money paid and amortizes these land use rights by using the straight line method over the term of the land use license granted by the applicable governmental authority.

Construction in Progress and Interest Capitalization

Construction in Progress and Interest Capitalization

Construction in progress is stated at cost. The cost accumulation process starts from the time the construction project is set-up and ends at the time the project has been put into service and all regulatory permits and approvals have been received. The Company borrows bank loans from time to time for these construction projects. The interest costs incurred for these construction projects have been capitalized during the construction process.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of that asset. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The carrying amount of cash and cash equivalents, accounts receivable, other receivables, advance to vendors, accounts payable and accrued liabilities, capital lease obligations and short-term loans are reasonable estimates of their fair value because of the short maturity of these items. The carrying amounts of capital lease obligations approximate their fair value based on the Company's current incremental borrowing rates for similar types of arrangements. Long-term debt approximates fair value since the bank term loans are fixed rate instruments and bear interests at the rate dictated and published by the People's Bank of China. The current rates published by the People's Bank of China approximate the interest rates of the loans outstanding.

Employee Benefit Plan

Employee Benefit Plan

Full time employees of the PRC entities participate in a government mandated employer defined contribution plan, pursuant to which certain pension benefits, medical care, unemployment insurance and other welfare benefits are provided to employees. Chinese labor regulations require the Company to accrue for these benefits based on certain percentages of the employees' salaries. The total provision for such employee benefits was $655,743 and $227,438 for three months ended March 31, 2013 and 2012.

Shipping and Handling Cost

Shipping and Handling Cost

All shipping and handling fees are included in selling expenses. Shipping and handling fees amounted to $2.4 million and $ 2.4 million for the three months ended March 31, 2013 and 2012, respectively.

Advertising Costs

Advertising Costs

Advertising costs are expensed as incurred. Advertising expense amounted to $377,261 and $282,921 for the three months ended March 31, 2013 and 2012, respectively.

Value Added Tax

Value Added Tax

All China-based enterprises are subject to a VAT imposed by the PRC government on their domestic product sales. The output VAT is charged to customers who purchase goods from the Company and the input VAT is paid when the Company purchases goods from its vendors. Input VAT rates are 13% for most of the purchasing activities conducted by the Company. Output VAT rate is 13% for chilled pork products, frozen pork products and vegetable and fruit products, and 17% for prepared meat products. The input VAT can be offset against the output VAT. The VAT payable or recoverable balance presented on the condensed consolidated balance sheets represents either the input VAT less than or larger than the output VAT. The debit balance represents a credit against future collections of output VAT instead of a receivable.

On a quarterly basis, the Company forecasts for each of its subsidiaries separately the amount of sales revenue necessary to fully utilize the VAT recoverable. Once the VAT recoverable for a subsidiary is determined to be non-recoverable in part or in full, the VAT recoverable is written off and booked as cost of goods sold or as impairment loss, depending on the nature of the event triggering the VAT write-off. The factors considered when evaluating to which account VAT recoverable is written off are as follows: i) if VAT is determined to be non-recoverable due to significant underperformance relative to expected historical or projected future operating results or negative industry or economic trend, VAT recoverable will be written-off to cost of goods sold, or ii) if VAT is determined to be non-recoverable due to significant changes in the strategy of the overall business, VAT recoverable would be written off as impairment loss. VAT write-off amounted to $1.9 million and nil for the three months ended March 31, 2013 and 2012, respectively.

Leases

Leases

The Company classified its leases at the inception date as either a capital lease or an operating lease. A lease is a capital lease if the following conditions exist: a) ownership is transferred to the lessee by the end of the lease term, b) there is a bargain purchase option, c) the lease term is at least 75% of the property's estimated remaining economic life or d) the present value of the minimum lease payments at the beginning of the lease term is 90% or more of the fair value of the leased property to the lessor at the inception date. A capital lease is accounted for as if there was an acquisition of an asset and an incurrence of an obligation at the inception of the lease. All other leases are accounted for as operating leases. In March 2013, the Company entered into a sale-leaseback agreement with CMB Financial Leasing Co., Ltd. ("CMB Leasing") to sell and lease back equipment. For details of the transaction, see Note 14, "Commitments and Contingencies".

Stock Compensation

Stock Compensation

The Company receives employee and certain non-employee services in exchange for (a) equity instruments of the Company or (b) liabilities that are based on the fair value of the Company's equity instruments or that may be settled by the issuance of such equity instruments. The Company accounts for stock compensation expense under the fair value recognition provisions of the FASB Accounting Standards Codification (ASC) Topic 718 (ASC 718), which requires companies to estimate the fair value of share-based payment awards on the date of grant using an option pricing model. See Note 10, "Equity Transactions", for further discussion on stock compensation expense.

Earnings Per Share

Earnings Per Share

Basic earnings per share does not include dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution of securities that could share in the earnings of an entity, similar to fully-diluted earnings per share. Such shares are excluded if determined to be anti-dilutive. Of the 787,000 options outstanding at March 31, 2013, 514,000 options were anti-dilutive and therefore excluded from the computation of diluted earnings per share for the three months ended March 31, 2013. The number of shares of common stock underlying the outstanding stock warrants and options at March 31, 2013 and December 31, 2012 were 273,000 and 240,000, respectively, which were all included in the computation of diluted earnings per share.

Government Subsidies

Government Subsidies

The Company's subsidiaries in China receive government subsidies from local Chinese government agencies in accordance with relevant Chinese government policies. In general, the Company presents the government subsidies received as part of other income unless the subsidies received are earmarked to compensate a specific expense, which have been accounted for by offsetting the specific expense, such as interest expenses. Unearned government subsidies received are deferred for recognition until the criteria for such recognition could be met.

Research and Development Expenses

Research and Development Expenses

Research and development costs are expensed as incurred. The research and development expenses for the three-month periods ended March 31, 2013 and 2012 were $132,331 and $86,628, respectively. The Company did not receive government subsidies that were specified for supporting the Company's research and development efforts for the three-month periods ended March 31, 2013 and 2012.

Comprehensive Income (Loss)

Comprehensive Income (Loss)

The Company adopted FASB ASC 220, Comprehensive Income , which establishes standards for reporting and presentation of comprehensive income (loss) and its components in a full set of general-purpose financial statements. The Company has chosen to report comprehensive income (loss) in the statements of operations and comprehensive income. Comprehensive income (loss) is comprised of net income and all changes to shareholders' equity except those due to investments by owners and distributions to owners.

Recently Adopted Accounting Pronouncements

Recently Issued Accounting Pronouncements

In January 2013, the FASB issued Accounting Standards Update ("ASU") 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarified that the scope of ASU 2011-11, Disclosures about Offsetting Assets and Liabilities, would apply to derivatives including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or are subject to a master netting arrangement or similar agreement. This ASU is effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013. Retrospective presentation for all comparative periods presented is required. The adoption of ASU 2013-01 did not have a material impact on the Company's consolidated financial statements.

In February 2013, the FASB issued ASU 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, which superseded and replaced the presentation requirements for reclassifications out of accumulated other comprehensive income in ASUs 2011-05 (issued in June 2011) and 2011-12 (issued in December 2011) for all public and private organizations. The amendments would require an entity to provide additional information about reclassifications out of accumulated other comprehensive income. For public entities, the amendments are effective prospectively for reporting periods beginning after December 15, 2012, with early adoption permitted. The adoption of ASU 2013-02 did not have a material impact on the Company's consolidated financial statements.