COFCO Strategy Overview

Integrated resource operation

In COFCO, Chairman Ning Gaoning follows the growth rule of Welch, the former CEO of General Electric Company: "Either first, or second, or you put it down." Once it's done, it's either sold or closed." For COFCO, "state-owned enterprises, foreign trade enterprises, diversified enterprises and transformation enterprises," there are dangers in each of them. They must put their eggs in different baskets and emphasize the advantages of specialization. Therefore, Ning Gaoning determined the enterprise The development strategy is to transform into an enterprise based on industry and industry, and at the same time engage in limited-related diversification and comprehensively integrate the enterprise. For example, the three Great Wall wines of COFCO have been systematically integrated and unified in terminal sales, highlighting the combined strength of the brand; such as using its own advantages to vigorously develop ethanol and bioenergy; the acquisition of Xinjiang Tunhe, the acquisition of Shenbaoheng, and the acquisition of Zhonggu Merger, entry into the insurance industry, etc. A series of mergers, acquisitions and reorganizations have highlighted COFCO’s integrated operations in terms of resources. For example, some are to expand product lines, some are to control upstream raw materials, and some are to enter growth industries. Form synergy with the development of the enterprise. In order to further promote the integration of COFCO, COFCO has recently spun off food, beverages and agricultural products in separate ways. COFCO will focus on the food and beverage business, and the company name will also be changed from "China Cereals and Oils International Co., Ltd." to "China Cereals and Oils International Co., Ltd." food". The spin-off "China Cereals and Oils", which is mainly engaged in agricultural product processing business, will be independently listed on the Hong Kong main board. After the spin-off is completed, China Foods' core business will be split into four parts: First, the Coca-Cola beverage and alcohol business, which is mainly engaged in the production, bottling, distribution and sales; second, it is mainly engaged in the production and sales of "Great Wall" and "Huaxia" " and other brands of red wine, white wine and Shaoxing wine; the third is chocolate and other candy products mainly "Jindi"; the fourth is the small package edible oil business mainly under the "Fu Linmen", "Fortune" and "Sihai" brands. The core businesses of China Cereals and Oils include biofuel and biochemical business, oilseed processing, rice trading and processing, beer raw materials, wheat processing business, etc.

Edit this paragraph’s development and growth strategy

Overview of COFCO’s business scope, it currently has three main businesses: food processing and manufacturing; grain, oil, food trade, grain, oil, sugar futures and logistics; Insurance, hotels, real estate development and operation, COFCO has formed a development pattern with the grain, oil and food processing industry as the main body and taking into account related industries. For these industries, they are undertaken by four major sectors: First, COFCO Grain and Oil Import and Export Company, which is engaged in the trade of grain, oil and food, mainly import and export business, and some re-export business; second, COFCO International, which is engaged in the production, processing and processing of grain, oil and food. manufacturing, including Fulinmen edible oil, Jindi chocolate, Great Wall wine, COFCO flour, COFCO malt and other products; the third is Pengli International, which is engaged in real estate and hotel business represented by Gloria Hotel, and has developed more than 500 hotels in China so far. Ten thousand square meters of property; the fourth is the financial sector, including futures brokers, financial companies, Sino-British Life Insurance, and Aon-China Insurance, engaged in industrial capital and financial capital grafting services. Regarding the development and growth of COFCO, the main ones are:

Collaborative diversification strategy

Since COFCO transformed from an import and export trader into the industrial development stage, the main industries it is currently engaged in include: : Food manufacturing, real estate, hotel, finance, insurance, bioenergy, etc. There is a synergistic relationship between these businesses. For example, according to the company's strategic positioning and the synergy between each business, it will have an impact on the company's current situation. Evaluate and review existing business and group-related businesses, obtain long-term growth momentum through internal growth and external expansion, and integrate resources within the company, including brand, channels, R&D, production, logistics, procurement, and organizational structure. For example, in terms of edible oil, it has formed a dominant position in the market. From independent Fulinmen to holding Luhua, to developing high-end Zicai, it has formed a series of brands and effectively formed brand differentiation; for example, the reorganization of Zhonggu has strengthened its role in the circulation of agricultural products. Advantages in the field; to enter bioenergy, it not only takes advantage of its own advantages, but also has the support of the country's energy strategy, and its development space is huge; it uses capital to enter insurance and real estate, integrates industries through strong capital strength, diversifies investment, and professional The centralized management has produced a better coordination effect.

For example, in the real estate industry, after the completion of the acquisition of Shenbaoheng, COFCO injected high-quality real estate development business into Shenbaoheng; and used Shenbaoheng's existing land resources to set up grain, oil, food, packaging, etc. in Bao'an District through leasing factories or other suitable forms. As a production and processing base for other products, Shenbaoheng has developed into a listed company integrating logistics, warehousing, trade, procurement, and real estate.

Groupization strategy

Judging from the current management model of COFCO’s five major business groups and subsidiaries, COFCO as a whole is implementing a group development strategy, adopting holdings and acquisitions. In other ways, we use capital leverage to integrate industries and form an overall value chain and supply chain with synergistic benefits. Of course, in the process of groupization strategy, COFCO’s group culture, core competitiveness, and unified image of the group have not yet been effectively formed. Although its product brands and corporate brands have gained greater popularity and reputation, the group The brand image still needs to be improved.

Edit this paragraph COFCO Group’s vision

“You cannot put your eggs in different baskets, but you must also emphasize the advantages of specialization.” For the future development of COFCO, we need to build COFCO Core competitiveness beyond capital, because as a leading company in the domestic grain and oil industry, COFCO’s industry competitiveness is not strong and its business development is not stable enough. There are few means of competition, and the focus of competition is mainly limited to production capacity and layout, but lacks the complete integration of management of all aspects of the supply chain, talents, products, brands, technologies, resources and other elements, profit models, supply chain competition, corporate governance and management The lack of core competitiveness such as systems and corporate culture models may be COFCO’s biggest hidden pain at present. With the further liberalization of the market and competition from abroad, COFCO Group should further develop its "combination punch" and cultivate its own "core", so as to continue to grow healthily in the increasingly internationalized market landscape. Implement industry focus, product focus, and continuous innovation, and follow the path of "industry integration" and "market diversification"; operate across regions, reasonably concentrate and disperse resources, improve and establish management and control capabilities and systems, and guide the development of internal human resources, Pursue stable investment returns; standardize operations, intensive integration, systematic processes, and standardized systems to ensure superior competitive position. As Dong Huan said, the shaping of COFCO's core capabilities must be introverted, that is, based on the company's strategic positioning, using professional development as a means, and taking into account COFCO's existing brands, talents, market networks and other core resources with relative competitive advantages. , drive the integration of corporate knowledge base, innovation mechanism, management, culture, resources, technology, services and other core resources, and establish an independent R&D system, effective management platform, systematic corporate governance and control system, and advanced and applicable corporate culture. Improve the group's management and operation capabilities and innovation absorption capabilities to exert a "Wal-Mart" effect. It also requires outreach, that is, aiming at core competitiveness and obtaining the core technology sources or talents who master the core technology sources needed by the enterprise through market means; establishing strategic alliances with enterprises with complementary advantages or merging and acquiring enterprises with certain comparative advantages. Businesses and groups. COFCO's current mergers and acquisitions and possible future internationalization are nothing more than a means and process of outreach. Therefore, in this process, COFCO must be alert to the various crises and huge risks brought about by outreach. Only with strong enough integration capabilities, error correction capabilities and balancing abilities can the success of outreach be ensured.