Food giant says that it will establish 18 new specialized companies
State-owned China National Cereals, Oils and Foodstuffs Corp, the country's biggest food trader, on Monday announced further moves to streamline its operations, saying it would establish 18 new specialized companies.
It said these companies will be responsible for its grain, sugar, edible oils, meat and other agricultural commodity businesses.
COFCO also said the group's headquarters will cut down the number of its departments from 13 currently to seven and Beijing's head office staff numbers will be reduced from 610 to 240. The SOE said it will give the remaining departments more autonomy in such areas as research and development, human resources and production.
But it said its listed subsidiaries, including China Agri-Industries Holdings Ltd, COFCO Property (Group) Co Ltd and COFCO Tunhe Co Ltd, will not be involved in the move.
COFCO Chairman Zhao Shuanglian said his company's plan was to have a small headquarters and big business segments to carry out the reforms of its operations and the management system.
The group said it will send full-time directors and supervisors to the 18 new companies to look after shareholder's rights, but they will not be involved in the companies' decision-making and their business operations.
COFCO said its goal was to create from the 18 new companies two to three specialized units with revenues exceeding 100 billion yuan ($14.96 billion) during the 13th Five-Year Plan (2016-20).
"The main task for these companies is making profit via different types of businesses," said Zhao. "COFCO will ensure they accelerate the integration and development pace to establish a modern enterprise system, and strive to achieve diversification."
"They will conduct businesses and bear the risks on their own."
Like other SOEs, COFCO is in the midst of a major restructuring process. Last week the State-owned Assets Supervision and Administration Commission announced the merger of COFCO with Chinatex Corp, in the process creating a bigger rival to compete with the so-called ABCD companies.
The term ABCD refers to the companies that dominate global grain trading, serving as middlemen between farmers and buyers. The groups are ADM Co, Bunge Ltd and Cargill Inc from the United States, and the Netherlands-based Louis Dreyfus SAS.
COFCO said on Monday it will encourage its subsidiaries to hire more professional managers both internally and through open recruitment.
It also said over the next three years it will restructure and eliminate up to 100 companies, or 20 percent of its subsidiaries, that are not relevant to its core business and incapable of making a profit.
COFCO currently manages $71.9 billion of assets, has storage capacity of 31 million metric tons and an annual grain processing capacity of 89.5 million tons. It has businesses in more than 140 countries and regions throughout the world.
"As the government is welcoming private investors to participate in SOEs' stockholding reforms, the mixed-ownership model, transparent management and fair competition can be made possible," said Zhang Xiwu, deputy head of the State-owned Assets Supervision and Administration Commission.
