regional focus
F&A goes digital
As China's entry to the WTO nears, F&A
companies are scrambling to ensure
they'll catch the windfall. Certain to fuel
the market into the future is a B2B ini
tiative called foodChina.com led by one
of the largest Taiwanese agribusinesses,
Great Wall. And Rl is in on the action, as
10% shareholder.
Team players
Networked business
Everyone wins
All systems go
What'sNewS Issue 2 March 200
Set for launch in April,
foodChina.com is pro-
jected ro intermediate USD
100 million in sales in year
one. And facilitated rev-
enues are aimed to increase
to USD 1.5 billion by
2006. Taking a look at its
heavy-weight participants,
it seems foodCihina.com
will have no trouble
achieving success. Topping the list are:
Archer Daniels Midland (ADM), who last
year alone sourced 3 million tons of soya
beans into Greater China; the state-run
China National Cereals Oils and Food-
stuffs Import and Export Companv
(COFCO), the largest oils and grains
player in the Chinese economy; Conti-
Ciroup Companies, a major American ani-
ntal protein and feed ingredients supplier;
and Great Wall, a Taiwan-based com-
pound feed company with major partici-
pation in the Chinese poultry market.
continued from page 8
Hong Kong's head of commercial banking
says: 'Our cliënt base has been reduced by
more than 50%, but revenues haven't suf-
fered. We want to work with clients who
need numerous products. Whereas our fo
cus in the past tended to be on loans and
trade finance, today we have expanded
this to include syndication (with senior ar-
ranging roles), structured finance and
leveraged lease transactions. M&A is an-
other priority.' In terms of focus markets,
60% of Hong Kong's current cliënt base
are large customers in F&A or TMI. For
the 40% non-core, strict rules apply: good
credit quality; minimum return of USD
100,000 per year; and gross ROS 25%.
Other than their F&A prowess, these big
players have another similarity - they're
all Rl clients.
'This is a unique opportunity for Rl,' ex-
plains Peter Greenberg, Asian regional
head of F&A, who was instrumental in
organizing Rl's participation in food-
China.com. 'The fact that we've been
asked to join this initiative shows how
strong our relationships with these clients
are. And strategically speaking, sitting
around the table at the board
level with these major F&A
players is exactly where we
want to be in terms of our
strategie positioning in Greate
China.' With its famous AAA-
rating, Rl was an advanta-
geous addition to the top-tier
group. But the cooperation
runs deeper than that. In addi
tion to being a financier to a
COFCO/ADM |V, Rl has
shared a long-term, fruitful re
lationship with Mark Han,
chairman and CEO of foodChina.com
and president of Great Wall. 'Mark Han
understands what Rl is about,' says
Greenberg. 'He's familiar with our fo-
cused F&A research-driven approach to
the business, and he's even been a presen
ter at one of our sponsored conferences.
Ffe knows our unique ski 1 ls and F&A
knowledge really complement this group.
Greenberg hastens to add: 'we are not act
ing as a service provider to the venture bi
are instead welcomed in on the basis of
our unique F&A focus.'
Today, ADM, COFCO, Conti and Great
Wall form a nexus of producers and sup-
pliers. And foodChina.com will drive that
level of integration even further. COFCO
will act as 'lungs' for the site, providing
the oxygen to take the initiative off the
ground by sourcing and selling commodi-
ties fundamental to the Chinese economy.
Together with ADM, COFCO is joint
shareholder (along with major Rl-Singa-
pore cliënt, Wilmar) in a large oil seed
crushing facility. Conti and Great Wall co-
own poultry farms and processing facili-
ties, and COFCO sells feed ingredients to
Great Wall. These activities can be stream-
lined and increased across the entire sup-
ply chain with foodChina.com's B2B ca-
pabilities, reaching hundreds of the
shareholders' buyers and suppliers and
their buyers and suppliers.
'This is a win-win situation,' says Green
berg. 'Participation is this initiative gives
us deeper insight into the overall direction
of China's F&A business, which is no
smalt feat. This market is extremely chal-
lenging to navigate.' Overall, the benefits
of foodChina.com aren't easily over-
looked: it improves Rl's vision of the mar
ket; enhances relationships with the pow-
erful clients involved; and, should the site
be as successful as predicted, will generate
results on the financial side. 'lf there's any
B2B site in China's food and agribusiness
that can succeed, this will be the one,'
Greenberg predicts. 'And Rl will be there
to pioneer the way.'
'In this market, it's not al-
ways a question of the right
sector,' Cheung adds. 'It's
very much about identify-
ing the right cliënt to whom
we can offer unique prod
ucts and creative solutions
while generating a decent
return.'
J Alex Cheung
Even though I long Kong
has already made vast improvements, it's
not done yet. In early March, a two-day
off-site meeting continued the process of
'self-reflection'. 'We're really asking peo-
ple to become more region-fo-
cused,' Weulen Kranenberg ex-
plains. 'In the past, local GMs
tended to function more or less
autonomously. We weren't pool
ing our resources as much as we
could. Now, we are seeing
where we can operate and or-
ganize more effectively, elimi-
nate redundancies, improve
communication, and provide
seamless cross-border services
for clients. We want to integrate
what has been achieved in Flong Kong in
all the regional offices. In the end, when
this region takes off the way it's expected
to, we'11 be right there, and we'll be ready.'
F&A's Peter Greenberg
