CP's China arm takes up modern farm management - The Nation

Home ? business ? CP's China arm takes up modern farm management

ACHARA PONGVUTITHAM
THE NATION August 14, 2012 1:00 am

Trusted by the Chinese government, Chia Tai has been selected to manage the modernisation of the farm model through a so-called four-in-one cooperation project, involving government, farmers, the private sector and banks. So far, Chia Tai is managing or setting up 13 modern farm projects with a combined investment value of 30.283 billion yuan. These are in Jiangxi, Jiangsu, Hebei, Anhui, Shandong, Jilin, Guangdong, Xinjiang, Zhejiang, Jiangsu, Hubei, Shandong and Beijing. The projects concentrate on hogs, chickens, shrimp and eggs. Of the total project value, four projects with a combined value of 23.62 billion yuan have inked agreements with the Chinese government. Chia Tai supplies breeding stock for shrimp, pig and poultry farming, as well as feedstock, technology and marketing management. The Chinese government wants the project to help revolutionise its farm sector to ensure the country's food security and better living standards. Farmers will be encouraged to use modern techniques and equipment to increase revenue. Buoyed by rapid economic growth, the Chinese government wants to reduce poverty and believes introducing technology to its agricultural sector can help. It hopes the initiative will narrow the income gap between urban and rural residents. The CP group's new interest in managing mega farm projects is parallel to its investment in business expansion to ensure sustainable growth of its four core operations in China: agriculture, retail, industrial manufacturing, and property. Chia Tai is a minor shareholder holding at least 15 per cent of each project. This will encourage Chia Tai to grow more in the field of professional project management rather than only focusing its expertise on the agriculture, food and retail sectors. Thanakorn Seriburi, vice chairman of CP Group, said it was stepping up its investment in China to ensure expansion of its business in the future. The joint investment in and management of modern farm business will help extend the group's business and its efficiency. It is CP's policy to increase investment in China by 15 per cent per year to ensure annual sales growth by the same percentage. In addition, the production from these modern farms can directly supply the group's retail business in China, Lotus Supercenter. "Our whole strategy is aimed at strengthening the group's production from upstream to downstream as well as generating wealth for people there. The group's philosophy is to make a contribution with what we are invested in," Thanakorn said. Thanakorn, who is also chairman and chief executive officer of CP's automotive and industrial products business group in China, said the company would consider selling some of its non-core businesses in China such as beer, in which it is in a joint venture with a local partner under the Tsingtao brand, to whoever makes an attractive offer. The company holds a 25-per-cent stake in Tsingtao. Chia Tai has also won a concession in a mixed-use development project in Luoyang, Hainan province, and high-end condominiums - part of the Bt20-billion project - will be available for booking next month. The entire project should be completed in 2015, Thanakorn said. After groundbreaking in 2011, the 120-rai (19.2-hectare) development, Chia Tai International Plaza Luoyang City Civic Centre, comprises an eight-storey government centre, an eight-storey shopping centre, and 12 condominium blocks with 40-55 floors each. Successful investment of |Super Brand Mall in Pudong, Shanghai, has encouraged the group to step forward on property development.

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