China's government urged to support local soy firms

 

 

The Chinese government has been urged to work out a series of policies to shore up the domestic soy companies in a market dominated by their overseas rivals.

 

The China Soybean Industry Association (CSIA) has handed in report on the soy market overview and solutions to the Chinese regulatory authorities, seeking policy support from the government for the struggling soy companies to lessen reliance on soy imports.

 

The government is expected to give domestic players a boost when they strive to survive in the cut-throat competition, especially when the soy industry is at a critical point, leading to either a death or a rebirth, said an official for the Heilongjiang Soybean Association (HSA).

 

Only by setting up an industrial chain completely composed of soy companies at home can the existing players stay away from a long-brewed mergers and acquisitions frenzy started by the overseas companies, said the official.

 

Nearly 60% of soy processors in Heilongjiang have suspended production, partly due to the soy crisis in 2004, and that plenty of soy processors will stand at the sidelines as the market prospect will not be foreseen until this April.

 

The association is trying to ask for aid from the government in an effort to help domestic companies, especially those in the midstream sector, free from the reliance on their partners abroad and more importantly, grow stronger in the long run, said Liu Denggao, vice president for the CSIA.

 

 

Currently, the Chinese soy grinding industry is falling in the hands of overseas companies, with a host of the Chinese soy grinders acquired or merged by their foreign-invested counterparts. ADM, Bunge, Cargill, and Louis Dreyfus had bought more than 70% of the production-suspending soy processing companies in China amid the soy crisis in 2004, starting their inroad into the world's most populous edible oil market.

 

It is crucial to nurture local companies with a policy support, said Liu.

 

He pointed out that previous financial support such as subsidy proved to be of little help to make domestic companies more sustainable.

 

The government should come up with a set of measures concerning a variety of factors like trade, investment, business development, employment, as well as food security, according to Liu.