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State's cowboy keeps profits rolling

Good food is the lifeblood of China's national food enterprise and the quality demanded by chief Ning Gaoning shows even in its canteen

PUBLISHED : Monday, 19 November, 2012, 12:00am
UPDATED : Monday, 19 November, 2012, 4:13am

There is a popular list that epicures have made of staff canteens in Beijing.

High on the list is Google's, where a wide variety of food is offered to suit the tastes of its talents from around the world.

The other highly praised canteen belongs to China National Cereals, Oils and Foodstuffs Corporation (Cofco), known for the high quality of its ingredients and for its meticulously cooked food. These two companies that take such good care of their employees' stomachs were nurtured by different market environments.

One is a Western giant of innovation that arose from rough-and-tumble free competition, while the other is a firm that has prospered, thanks to China's unstinting support of its state-owned enterprises (SOEs) and to a strong manager - Ning Gaoning, who calls himself a cowboy for state assets.

Ning, 54, has been chairman for eight years at Cofco, the mainland's largest food trader and processor. The party cadre made headlines when he defended the mainland's reliance on SOEs during the Communist Party's 18th national congress last week.

There were good reasons for the mainland's development of SOEs, Ning said in an interview on the sidelines of the congress.

A responsible SOE provided jobs and improved people's living standards by offering products and services of higher quality, he said.

The Shandong native was born into a family of physicians. He joined the People's Liberation Army at 18 and became an artillery soldier. Two years later, he enrolled at Shandong University and majored in economics.

After graduating with a master's degree in business administration from the University of Pittsburgh in 1987, he came to Hong Kong.

Ning joined China Resources (Holdings), a company that was repositioning itself from being the mainland's sole agent for import and export firms.

With the opening of the mainland's foreign trade sector, the time had passed when the company could make easy money just by approving imports and exports.

Ning helped the firm strengthen its foothold in various industries by launching a series of mergers and acquisitions in the mainland's brewery, textile, property development, chemical and other industries.

He financed the deals with retained earnings of the holding company and funds raised in Hong Kong through stock market listings and bond issues by its units. As an SOE, the company had easier access to its acquisition targets, some of which were owned by local governments.

Modern management expertise and market acumen brought by China Resources benefited the industries, serving well the desire of the central government to consolidate and upgrade obsolete industries in which many firms were burdened with managements who were clueless in the face of market competition.

Ning rose from grass-roots employee to group chairman in 17 years. His international outlook and experience in reorganising companies impressed Beijing. At the end of 2004, he was transferred to Cofco to help with its restructuring.

When asked whether SOEs squeezed out private companies, Ning said: "We should think about things against their historical background."

When private firms were weak and had little market knowledge, a mature leader, whether SOE or not, could improve the status of the whole industry, he said.

At Cofco, Ning helped streamline businesses by chopping those that made low profits and strengthening the areas in which the firm has an advantage.

He has been looking globally for opportunities to acquire soya bean, sugar and other farm products.

The company distributes the edible oils and other food to supermarkets and its online retailer, Womai.com

Ning said: "We are providing foods along a whole chain of supply, which used to be controversial but now has been accepted by people both inside and outside the company. As we can control every link of food production, quality is ensured. Also, efficiency is improved."

Under his management, the group's net assets almost quadrupled over the seven years to 2011. Profits exceeded 10 billion yuan (HK$12.43 billion) for the first time last year, compared with 1.58 billion yuan in 2004.

Cofco became the largest shareholder of Mengniu Dairy last year, taking the helm from private entrepreneurs when the well-known brand was engulfed in a contaminated-milk scandal.

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