COFCO Group started from grain, oil and food trade and processing, and gradually developed into the real field, becoming a multi-industry and cross-field investment holding group company involving agricultural product processing and trade, finance, real estate and other industries. It ranks first among the top 100 industrial companies and among the top 500 global companies in the US Fortune magazine. Since 2005, COFCO has successfully carried out large-scale strategic transformation. COFCO's management team, represented by Chairman Ning Gaoning and President Yu Xubo, launched a comprehensive strategic transformation focusing on the "whole industry chain", transforming from a traditional trading company to an industrialized enterprise, from a policy Transform from sexual business to market-oriented operation, and from opportunistic business to building the core competitiveness of the enterprise.
1. Traditional strategy
Trade-oriented strategy:
Before 1987, COFCO was a typical foreign trade enterprise, relying on its foreign trade monopoly and Resource rights survive and develop. In 1992, COFCO began to transform from a traditional foreign trade agency to a diversified company. In 1996, COFCO proposed the "Four, Three, Three" operating pattern—import and export trade accounting for 40%, industry accounting for 30%, and futures, finance and services accounting for 30%. Industry has become an important part of the company's operating pattern.
In December 2004, Ning Gaoning "parachuted" from China Resources Group to COFCO and became the new chairman of COFCO. At this time, COFCO’s traditional foreign trade is still its leading business.
2. Whole Industry Chain Strategy
After COFCO Group entered the new century, the external environment it faced has undergone tremendous changes, which requires COFCO Group to “plan before taking action”. Make fundamental changes in mission, vision, development strategy, business strategy, etc., realize the transformation from a pure trading enterprise to a full industry chain model, and maximize value through economies of scale, synergy and industrial status.
1. COFCO Group’s mission and vision
COFCO Group’s products mainly include grain trade, agricultural product processing, food manufacturing, biomass energy production, real estate, etc. Therefore, COFCO, as a central enterprise, must be committed to providing society with abundant food and solving food safety issues that both consumers and the government are worried about. This means that COFCO must build a strong grain, oil and food industry system. From bulk grain and oil trade to food processing and sales, COFCO must open up all links of the industrial chain to provide consumers with a rich source of food.
2. Development strategy
COFCO Group’s overall strategy: to become a multi-business investment holding company focusing on grain, oil and food trade and processing. Its main business is concentrated in grain trade, processing, and food processing. Processing, sales, local livestock products, real estate, hotels and financial services; by giving full play to the main channels of grain trade and the status of the main supplier of Chinese food, to meet customers' increasingly high-quality demands for grain and food; to establish a domestic and international grain trade , distribution, logistics, and processing systems, and establish the R&D, production, logistics, and distribution systems of branded foods, thereby establishing a truly international position as a major grain, major food processing and trader.
In April 2005, COFCO Group established the development idea of ??"limited related diversification of the group and professionalization of business units": COFCO's first priority is to develop its main business and not engage in excessive diversification. New entrants into any industry must be cautious; industries must be relevant and synergistic; each business unit must form its own development goals and industry competition strategies, and there can no longer be a diversified business portfolio under a business unit; Allocate resources to business units with development prospects and enhance the overall competitiveness of the group by continuously adjusting the business portfolio.
3. Business strategy
COFCO Group’s main business segments:
(1) Grain and oil business: The company integrates COFCO Cereals and Oils, China Cereals and Oils, and China Foods The large grain, oil and food business group has formed a three-stream industrial structure of upstream, mid-stream and downstream under the grain "big channel" business philosophy, and plays the main channel role of state-owned grain and oil enterprises.
(2) COFCO Real Estate: COFCO Real Estate focuses on the residential real estate field and is positioned to provide high-end residences, supplemented by urban complexes with mid- to high-end residences and other mixed functions, and achieves balanced development through a reasonable business mix.
(3) China’s livestock business: China’s livestock business includes tea, timber, cashmere, flavors and fragrances, shipping and other industries.
(4) COFCO Tunhe: In June 2005, COFCO comprehensively reorganized Xinjiang Tunhe Investment Co., Ltd. and renamed it COFCO Xinjiang Tunhe Co., Ltd.
(5) COFCO Packaging: COFCO Packaging Holdings Co., Ltd. is a leading enterprise in the field of comprehensive consumer goods metal packaging and the largest metal packaging group in China.
(6) COFCO Meat
(7) Financial Business
As a result, COFCO Group is guided by consumer and customer needs, covering everything from field to table , from agricultural raw materials to end consumer goods, including planting, procurement, trade and logistics, food raw materials and feed production, breeding and meat processing, food processing, food marketing and other links, through systematic management and key links of the entire industry chain Effective control will form overall competitiveness, provide consumers with safe, nutritious and healthy food, and achieve sustainable development of the enterprise.
4. Capital operation strategy
According to the overall development strategy and through capital operation, COFCO Group continues to carry out business reorganization and asset integration, optimize the industrial structure, and currently has 4 listed companies in Hong Kong company and 3 mainland listed companies.
In recent years, COFCO has actively carried out a large number of capital operation activities in accordance with the requirements of the group's strategy, actively extended to the upstream and downstream of the food industry, built the entire industry chain, and achieved integration. Under the guidance of the new strategic thinking, COFCO has formed nine business segments through a series of mergers, acquisitions and spin-offs, including grain trading, grain and agricultural product processing, biomass energy, branded food, real estate, hotels, local livestock products, packaging, and finance. The new pattern of industrial development formed has basically realized the transformation from trade to industry. COFCO's competitiveness has also been greatly improved: compared with 2004, COFCO's total assets and operating income more than doubled in 2008, its operating profit increased five times, and its net profit increased more than three times.
1. What is strategic vision? What is COFCO Group’s strategic vision?
2. Explain company-level strategy and business-level strategy with examples from COFCO Group.
3. Why does COFCO Group need to carry out strategic transformation?