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2015/IEG/WKSP/011 Session: 3
Sweet Business - COFCO Footprint in Australia Sugar Industry
Submitted by: COFCO
Workshop on the Best Practice of the Sustainable Investment in APEC Region
Beijing, China9 February 2015
1
中澳甜蜜之旅 —中粮屯河Tully糖业
Sweet Business —COFCO Footprint in Australia Sugar Industry ——Sugar department of COFCO TUNHE
于作江 Yu Zuojiang
2015年2月9日 Feb 9,2015
2
In 1960, China and Cuba signed an agreement of long-term import of sugar COFCO began its sugar business
China reformed the Sugar circulation system in 1991. Sugar was allowed to trade freely. Therefore, COFCO’s sugar business gained rapid development Since China joined the WTO, the sugar business of COFCO has grown rapidly. COFCO’s sugar imports have accounted for more than half of China's total imports
COFCO bought TUNHE in 2005, and began its beet sugar business COFCO acquired a 100% share in Australia Tully Sugary in 2011, and began its cane sugar business
COFCO acquired 51% share in Noble Sugar in 2014, and set up a joint venture A refined sugar project in Caofeidian was started in July 2014. The annual output is expected to be 500 thousands tons COFCO bought Huafu Trade & Development Group Corp in 2014
中粮食糖业务快速发展 The sugar business of COFCO has developed rapidly
1960 Sugar
cooperation with Cuba
1991-2004 Sugar
distribution system、 China
joint in the WTO
2005-2013 COFCO bought
TUNHE
2014年— a large-
scale acquired businesses
After 55 years of experience and accumulation, a value chain of processing-refining-trading has been formed in COFCO TUNHE.
3
COFCO Sugar Platforms
Sugar department of COFCO TUNHE
HUAFU Sugar Noble Sugar
COFCO acquired the agribusiness of Noble Group and Huafu Trade & Development Group Corp, which has made the sugar supply capacity increase to 4.75 million in three years.
Holding 51%
So
uth
Su
gar
No
rth S
ug
ar
Refin
ery
Ove
rseas S
ug
ar
Sale
s Dep
artm
en
t
Su
gar Im
p/E
xp D
ep
.
B2B
Sg
uar P
rod
.
Su
gar S
ale
s
Su
gar Im
p/E
xp
Sto
rag
e a
nd
Lo
gistics
B2C
Su
gar p
rod
.
B2C
Su
gar sa
les
China Merchandise Reserve
Zhongtang Corporation
Bra
zil Su
gar P
rod
.
Su
gar S
ale
s
Su
gar tra
din
g
Pro
t log
istics
Sugar Dep. No
ble
Gro
up
Holding49%
中粮屯河糖业版块迅速扩大 Remarkable growth of the sugar business scale in COFCO TUNHE
4
把握商业时机,中粮收购澳洲Tully糖业 Catching a business opportunities, COFCO acquired Tully Sugar
1925
1990
2011
2014
Tully started crushing in 1925
Tully mill turned into a limited company in 1990
In 2011,COFCO acquired a 100 percent share in Tully Sugar
Achieve new record highs for both crushing and sugar production in 2014
Tully Sugar
5
优化产业结构,扩大产能 Modifying the industrial structure, expanding capacity
Since Tully was acquired by COFCO, large amounts of capital investment and maintenance were taken for capital expansion. In 2014, new record highs were set for Tully’s raw sugar.
10,551,328
11,367,723
5,516,183
10,097,815
6,821,780 12,692,958 10,807,882 12,103,127
2011 2012 2013 2014
Capital expenditure and maintenance
costs of Tully(Australian Dollar)
资本性投资 CAPEX 维修维护费 Maintenance
1,158,077
1,773,537
2,338,000 2,436,800
2011 2012 2013 2014
Tully’s crushing amount in recent years
(ton)
6
建立平衡董事会,推行6S管理体系 Establishing a board of directors in balance, popularizing the 6S management system
Initially, COFCO appointed the sugar cane directors, the
COFCO director and independent directors as the board of
directors. The sugar cane directors were the chairman of
Tully sugar.
In August 2014, the COFCO director was elected by the
board of directors of Tully sugar as chairman. A board of
directors with a balanced "3 + 3 + 2" structure was formed.
Balanced Board of Directors
6S strategic control system
6S
Strategy
system
Budget
system
Management
reprot System
Internal Audit
system
Performance
assessment
system
Management
Assessment
system
7 7
依靠当地团队,开展日常工作 The performance of daily operations by the local team
Daily operations still performed by the local team
COFCO didn't adjust Tully’s management, it only sent two grass-roots workers to Tully sugar to help communicate with COFCO headquarters.
Build up risk control
COFCO established a risk control department to monitor global trade risks
Implementing the COFCO investment review system
The COFCO investment review system was implemented, to ensure that the factory capacity matched with the sugarcane crushing amount.
8 8
Inviting Tully’s board to visit COFCO headquarters and domestic
mills
Coordinating the relationship with QSL
Storage expense decrease by A$11/tonne of sugar, A$3m annual savings
Organizing agricultural technology communication
Australian expert provided technical support in variety selection, soil testing, fertilizer and pest control
加强产业协同,组织技术交流 Strengthening industrial cooperation, and organizing technical communication
Synergy emerged through sugar industry communication
9 9
加强相互了解,发挥资源优势 Deepening mutual understanding, making use of the resource advantage
Introducing the COFCO in detail and putting forward some initial ideas of an Australian sugar independent marketing system Understanding the ideas and expectation of cane growers.
Trade communication
Regularly organizing cane growers meetings and inviting agricultural experts to teach the cane growers.
Cane-growers meeting
International purchasing
Making full use of the advantages of the global purchasing network of COFCO, helping Tully reduce costs.
Offering loans to cane growers , ensuring the sugar cane planting.
Offering loans to cane growers
10 10
利用中粮优势资源,协同发展 Making full use of the resource advantage, developing in coordination
Tully-Hongkong
COFCO HK
Trading advantages
Cooperative research
Tully
Full industry chain and resources
Mu
tual g
ran
tee
cooperation model With complementary advantages, establish win-win
cooperation, achieve common development
In order to reduce sales costs and provide growers with a cheaper and more efficient pricing system, the COFCO Hongkong trading team is fully utilized to reduce financing and pricing costs
Expending collaboration among Noble Agri, Hongkong, Australia and COFCO in international sugar trading, with the strength of Huafu domestic sugar production and storage, and the guild COFCO sugar integrated value chain
Tully-Hongkong-Noble-HuaFu
11 11
发展生态友好型农业,强化研发力量 Developing ecological agriculture, enhancing research and development
TSL pays full attention to agricultural sustainable development , including reducing pollution , developing a circular economical business model and improving product utilization
Cooperating with SRA, BSES and SRI to develop green agriculture. Supporting the research of ASMC and SRI.
Developing RD&E
78,210 91,358
107,642
2,941 4,232 5,500
-
20,000
40,000
60,000
80,000
100,000
120,000
2012 2013 2014
TSL RD&E expenses
(Australian Dollar)
ASMC SRI
Appropriate use of nitrogen and phosphorus
fertilizers. Protecting the Great Barrier Reef
coral areas.
Strengthening environmental protection
Developing a cyclical economy
Tully uses waste bagasse to generate
electricity. Ash will be used as land fertilizer and
waste water can be used for cyclic heating.
12 12
支持当地就业,推劢人才培养 Supporting the local workforce, pushing forward personnel training
In 2013, TUNHE started an
“Overseas Talent Training Plan”.
Young employees are selected
to participate in the overseas
rotations internship.
Developing an international talent team
Permane
nt, 205 212 214
59 67 71 264 279 285
12/13 13/14 14/15
Tully permanent and seasonal
employee
Creating about 285 jobs for the
local workforce.
Supporting the local workforce
Providing opportunities for excellent staffs to travel in China. Improving employees' understanding of COFCO.
Selecting excellent staff
13 13
劣力公益发展,提出社区共建 Commitment to the public good
Tully sugar is a major sponsor to promote local skills. Staff are selected to introduce agricultural knowledge to the local high school and nearby residents each year.
Tully sugar board pays $40000 per year to support the local community activities Provides medical equipment support to the local Red Cross and hospitals Funds $200 per year to the local high school to hold the school sports meeting Supports the local football Club
Providing technical information
Funding community activities Apprenticeship project
10 apprentices are selected by Tully to learn skills from experienced staff
14 14
相互尊重文化,塑造良好企业氛围 Respecting cultural differences, cultivating a favorable work atmosphere
COFCO is devoted to establishing mutual cultural understanding.
Great differences exist between foreign countries and China. COFCO implements a people-oriented strategy, trying to strengthen communication with local people and fully understand the local customs.
In order to gain the recognition of the local community, TUNHE make efforts to promote COFCO culture, and support community activities.
Creating a good image
Respecting local culture
15 15
践行社会责任,提高企业认可度 Fulfilling social responsibilities, increasing the company‘s reputation
protect the
interests of
sugar cane
comply with local
environmental
regulations and
health and safety
laws
Create jobs
and provide
training
opportunities
Make large
amounts of
capital
investment,
expand the sugar
supply capacity
Establish board of
directors in balance,
development in
coordination
By establishing an efficient management system, maintain good employee –
management relationship, COFCO fulfill corporate social responsibility and
maintain their enterprise image.
16
Thank You
Welcome to Tully
16
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