ZhongGu Junchuang Bets on Western China With a New Mycelium Production Hub
- Gauri Khanna
- 6 hours ago
- 3 min read
Too long to read? Go for the highlights below.
Inner Mongolia startup ZhongGu Junchuang is building a 43,000 sq ft mycelium facility in Chengdu, backed by around $22 million in government support.
The new site will have 20 times the production capacity of its existing base and will serve both business clients and direct consumers.
The company already holds a 1,000-tonne annual supply contract and is positioning mycelium as a nutritional upgrade for everyday staple foods.
China's fungi sector is quietly maturing. While much of the global conversation around mycelium has centred on Western startups chasing meat alternatives, a growing cohort of Chinese companies is pursuing a different angle: weaving mycelium directly into the fabric of everyday food. Inner Mongolia-based ZhongGu Junchuang Biotechnology is one such firm, and its latest move signals an ambition to scale that goes well beyond its northern Chinese roots.
A New Hub in the Heart of the Country
ZhongGu Junchuang has signed an agreement with the Xinjin District Government in Chengdu to establish a combined research and production facility in the city's Tianfu intelligent manufacturing industrial zone. The new site spans roughly 43,000 square feet and is backed by RMB 150 million, approximately $22 million, in government support. Operations are expected to begin this summer.
The location is deliberate. Chengdu sits at the gateway to Southwest China, one of the country's fastest-growing consumer markets, and offers proximity to academic partners including Sichuan University. The founding team sees the city as a bridge between ZhongGu Junchuang's established base in Inner Mongolia and a region hungry for functional food innovation. At full capacity, the Chengdu facility is projected to deliver annual output valued in hundreds of millions of RMB: a significant step up from current operations, where the entire production run is already spoken for by existing customer orders.
Feeding Demand, One Contract at a Time
The commercial logic is already taking shape. The company recently secured an annual contract to supply 1,000 tonnes of mycelium flour to a client in central China, priced at around $5,000 per tonne. The agreement is expected to run for three to five years. Dao Foods International, which invested in ZhongGu Junchuang in 2024, cited the founding team's technical expertise and entrepreneurial adaptability as key reasons for backing the venture: alongside what it described as a strong emphasis on production engineering and commercial application.
Unlike many producers that cultivate mushroom fruiting bodies, ZhongGu Junchuang works exclusively with mycelium. The firm argues this approach yields greater nutritional density, lower manufacturing costs, and better scalability. To produce its mycelium flour, cereal grains are fermented directly with fungal inoculants, improving their nutritional profile before being milled. The resulting flour can then be incorporated into staples such as dumplings and steamed buns: adding functional value to foods that are consumed daily by hundreds of millions of people. This approach echoes broader efforts to use fungal fermentation to transform agricultural side streams into high-value ingredients.
From B2B Supply Chains to Consumer Shelves
The Chengdu facility will support both business-to-business supply and direct-to-consumer products. On the B2B side, mycelium powders and concentrated purees are positioned to help established food manufacturers (makers of instant noodles, biscuits, and beverages) differentiate in crowded, commoditised markets.
On the consumer side, the company has developed its own sub-brands, including a mycelium-infused coffee blending Morel and Cordyceps militaris strains, and a mycelium-enriched flour range sold via platforms such as Douyin, WeChat, and Taobao.
The new facility will feature both solid-state and liquid fermentation bioreactors, expanding on the single solid fermentation tank currently operating in Hohhot. That production versatility matters: different applications, from dense protein powders to delicate beverage extracts, require different fermentation conditions. As mycelium-based protein ventures continue to gain traction across China, ZhongGu Junchuang's dual-track model positions it to serve both industrial processors and the growing number of consumers drawn to the "food as medicine" philosophy that has long resonated in Chinese culture.
Whether it can sustain that positioning at scale will depend on its ability to convert government support and early contracts into durable market share: a challenge that has humbled more than a few well-funded peers.
