(Bloomberg) -- China’s largest food company is open to partnering with its competitors as it seeks to meet its biggest challenge: feeding the world’s most-populous country.
“We will make sure we have a strong global supply chain to serve our goal in the China market and food security in China,” Cofco Corp. President Patrick Yu said in a Bloomberg Television interview at the state-run firm’s headquarters in Beijing. “Our strength is in China. We have to keep strongly in mind that we’re a Chinese company, we know China’s markets.”
The comments emphasize a shift in focus after Cofco had sought to create a global giant to compete with the likes of Archer-Daniels-Midland Co., Bunge Ltd., Cargill Inc. and Louis Dreyfus Co. by buying up assets including Dutch grains trader Nidera AV and the agricultural arm of Noble Group Ltd. Integrating the newly acquired businesses threw up unexpected challenges including surprise trading losses discovered on Nidera’s books.
“Going global is never easy and we have learned a lot over the past three years. I think Cofco is now becoming much stronger and much more realistic, with the right approach,” Yu said. “We would rather be partners with them instead of a competitor,” he said, referring to the ABCDs.
Cofco International Ltd. appointed a new management team last year as it merged the operations of Nidera and Noble Agri into the trading arm of the company. The integration had been held up, in part, by the discovery of a $200 million loss at Nidera due to a rogue trader and a $150 million financial hole in the firm’s Brazilian operations.
“To go global does not mean you have investment overseas, but means you have to upgrade your standard,” Yu said. “You need to have international standard of management as well as risk management.”
While Cofco’s current focus is on Chinese food security and seeking out partnerships, there’s still room for the company to invest in origination and independent supply chains in both Brazil and Argentina, according to Yu, who is also a delegate of the National People’s Congress. Yu didn’t rule out re-visiting global ambitions in the longer term.
“In the long run, if one day we can build ourselves as ABCDs, that’s our dream. That’s really long term,” he said. “First of all, we have to make ourselves strong in a market place and very efficient and competitive with the right people and right systems.”
©2018 Bloomberg L.P.
With assistance from Niu Shuping, Emma O'Brien