CCB makes US$160m foray into agriculture
China Construction Bank Corp's investment banking arm is set to make its first foray into rice production after signing an agreement yesterday to invest US$160 million on a project in Heilongjiang province.
The deal was one of 35 agreements worth a total of US$985 million signed by the Heilongjiang government with Hong Kong companies for agricultural business.
Heilongjiang officials, including governor Li Zhanshu, were in Hong Kong pitching for more investment projects in food processing and agricultural production.
The investment by Hong Kong-based CCB International is so far the biggest single deal that the government has signed and the project is expected to produce 80 million kilograms of high-quality rice each year, according to Guo Shaoquan of the province's agricultural committee.
Mr Guo said the arable area for the rice project was about 40,000 hectares. CCB International will provide the funds and its local partner, the land rights for the investment.
'This is an investment project and we are not going to grow rice by ourselves,' a source at the investment bank said.
Heilongjiang is the mainland's major grain producer. It has 11.73 million hectares of arable land, about 9.05 per cent of the country's total, and contributes about 33 per cent of the nation's soybean and 10 per cent of its total corn production.
'Heilongjiang has natural advantages in agricultural and food-processing development, and has long been established in these areas,' Mr Li said.
'But I have two headaches in developing agricultural business: our relatively low level of branding and packaging capabilities, and our marketing skills. We are here in Hong Kong to seek co-operation and help from investors.'
Heilongjiang and with two other provinces in northeast China, Jilin and Liaoning, account for 16 per cent of the country's arable land and contribute 16.6 per cent of the national grain production, or 83.1 billion kilograms annually, according to official statistics.