According to the State-owned Assets Supervision and Administration Commission, China National Textile Corporation (hereinafter referred to as “Zhongfangâ€) was incorporated into COFCO Group Co., Ltd. as a wholly-owned subsidiary. China National Textile Group no longer directly supervises enterprises as the State-owned Assets Supervision and Administration Commission.
Assets will cross the 500 billion mark
Before China Textile was merged into COFCO, on the scale of assets, COFCO is already the world's grain business leader.
Previously, COFCO
A table can show the status of COFCO in the global grain business.
The incorporation of China Textile will further strengthen the volume of COFCO's assets and open up the distance with other multinational grain traders.
As of the end of September 2015, China Textile's total assets were 24.347 billion yuan. From January to September 2015, the company achieved operating income of 27.226 billion yuan and total profit of 243 million yuan.
Together with China Textile's assets, COFCO is expected to cross the 500 billion yuan mark this year.
In the last ten years or so, COFCO is one of the biggest beneficiaries of central enterprise integration.
In 2004, Chinese soil animals were merged into COFCO.
In 2006, Zhonggu Grain and Oil Group Corporation was incorporated into COFCO.
In 2013, China Hualiang Logistics Group Corporation was merged into COFCO Group.
In 2014, China Huafu Trade Development Group Corporation was integrated into COFCO Group as a whole.
According to the data compiled by the author, in 1992, COFCO’s assets were only 9.5 billion yuan. In the past ten years of central enterprise integration and COFCO’s acquisition of Noble Agriculture and Nidela, COFCO’s assets are now close to 500 billion yuan. China is still global, and the rate of expansion of assets can be regarded as second to none.
However, in terms of profitability, COFCO is still at the bottom of the cross-border grain business. How to maximize the benefits of assets incorporated under administrative orders is still a long-term project.
How to sell clothes is a problem
The newly incorporated China Textile has two main businesses, of which the grain and oil business is highly correlated with COFCO.
As of 2014, China Textile's oil and fat crushing capacity reached 7.5 million tons per year, ranking the top five in the country. COFCO's oilseed crushing capacity exceeds 10 million tons, ahead of China Textile. After the merger of the two companies, the oilseed crushing capacity of the new COFCO is expected to be one of the best in the country.
Another main business of China Textile is textiles.
In 2014, China Textile's cotton business volume was 370,000 tons, ranking first in the country. Cotton is also an agricultural product. It belongs to the same bulk products as grain and oil. Louis Vuitton also has a cotton business in multinational grain merchants. This business is not difficult to handle.
China Textile also has a ready-to-wear segment, which is mainly engaged in the export business of garments, fabrics and home textile products. The garment export business accounts for more than 60% of the sales revenue of the garments segment. The main business entities include subsidiaries, international companies, Litehua and Oriental. There are 6 garment processing enterprises in the spinning and garment sector, with an annual production capacity of 10 million pieces/sets of garments.
The Chinese side also owns a listed company engaged in textile printing and dyeing business: Futian Industrial (00420.HK). In June 2012, through the allotment of new shares (409 million new shares, 1.25 Hong Kong dollars per share), China Textile invested 511 million Hong Kong dollars, holding 34%, becoming the largest single shareholder of Foton Industrial and has actual control over it. Futian Industrial is one of the world's largest manufacturers of cylindrical knit fabrics. It provides a highly vertical integrated service such as knitting, dyeing, printing and finishing. It supplies fabrics to garment manufacturers in more than 40 countries, including sportswear and casual wear. The brand of many internationally renowned retailers such as pajamas and underwear.
The COFCO Group, which is accustomed to grain and oil trade, warehousing and processing, is very concerned about how to deal with the textile assets of China Textile. Selling grain and oil products is quite different from selling clothes and fabrics. In the two industries that can't be compared with each other, COFCO can be integrated well, and there are still many unknowns.
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