International Competition
In the international agricultural market for basic foodstuffs
such as soybeans, about 80% of the market share
is dominated by four Fortune Global 500 companies:
Archer Daniels Midland (ADM), Bunge, and Cargill
of the United States and Louis Dreyfus of France-collectively
known as "ABCD." Since 2005, these multinational
firms have intensified their acquisitions in
the Chinese soybean oil processing industry. In 2000,
the number of Chinese soybean oil processing firms
exceeded 1,000. In 2006, there were only 90, and 64 of
them were wholly or partially controlled by foreign
investors. These 64 foreign-invested firms command
85% of the production capability.
In 2005, Baogang Seed-Oil Corporation, once a
leading seed oil manufacturing company in Jiangsu
Province, declared bankruptcy as a result of capital
shortage. The company could not pay its debt, so the
Nantong municipality government authorized it to be
leased by Cargill. However, employees clearly knew
that the "lease" was just a transition form and that the
company's eventual fate would be an acquisition by
Cargill. In addition to acquisitions, foreign firms are
shifting some attention to soybean research. For example,
Kwok Brothers Corporation of Singapore held
talks with the Academy ofAgricultural Sciencesin Heilongjiang
Province, hoping that the academy would
license the output ofqtsresearch to the Singapore company.
By popularizing the new breed of soybeans pioneered
by the academy, the Singapore company hoped
to purchase such soybeans directly from farmers when
harvested and then to gradually monopolize the soybean
industry of Heilongjiang Province (and perhaps
even the whole country).