State firm the 'go to' body for agricultural trading since 1950s

PUBLISHED : Tuesday, 13 July, 2010, 12:00am
UPDATED : Tuesday, 13 July, 2010, 12:00am

China National Cereals, Oils and Foodstuffs Corporation (Cofco) has been the bridge between the country and the world for trading agricultural products since the 1950s.

State-owned companies, such as Cofco, are often charged with pioneering new industries, like biofuel, until the sector is developed, at which point it is opened to other players.

Cofco brought Coca-Cola back into the mainland in 1979 after the product was banned when the People's Republic of China was established in 1949.

In the late 1980s, Cofco was transformed from a state-owned trade agency to a corporation, albeit still government-owned.

In the early 1990s, Cofco further restructured creating subsidiaries, some of which became listed companies, such as China Agri-Industries Holdings and China Food.

The company also pushed reforms in the mainland's agricultural sector, including improving the quality of grain and modern production techniques.

In the process, Cofco diversified into real estate and hotel management.

It is actively looking for acquisition targets along the food supply chain, recently expanding into pork products. It also become the largest shareholder of China Mengniu Dairy, one of the 22 dairy producers found to have sold products containing melamine in a scandal that killed six children and made 300,000 ill on the mainland last year.

Frank Ning Gaoning, who gained experience in consolidating bulky state-backed firms when he was chairman of another conglomerate, China Resources Enterprise, believes Cofco's various businesses should be clearly categorised into separate branches to appeal to investors.