The Chinese Want Their Own Cargill

For years, China’s automakers, oil and gas players, and technology companies have pursued their global ambitions by acquiring foreign companies. Now Chinese agriculture is getting its turn. On Feb. 28, China’s largest food processor and grain trader, Cofco, originally known as China National Cereals, Oils and Foodstuffs Corp., announced it would buy 51 percent of Dutch grain trader Nidera. The investment gives the state-owned company access to port terminals, grain elevators, and processing facilities for soybean, wheat, and corn in Argentina and Brazil, as well as Nidera’s seed business. It’s “in line with Cofco strategy to become a global player in the agricultural industry,” said Frank Ning, its U.S.-educated chairman, in a statement.

Days later the industry was talking about Cofco’s probable next move outside its home market: purchasing the agricultural commodities trading operation of Hong Kong-based Noble Group. Two years ago, “Cofco announced it had a $10 billion war chest for future overseas deals. So now it is using that money to do deals left and right,” says Teng Bingsheng, a professor of strategic management at Cheung Kong Graduate School of Business in Beijing. “I wouldn’t be surprised if we see a [Noble] deal soon.” Teng notes that China’s sovereign wealth fund is Noble’s second-biggest shareholder. Cofco declined to comment on a possible purchase of Noble assets or say how much it paid for its Nidera stake. Noble has only said it is talking to a consortium about a joint venture.