August 4, 2008
Japan's Itochu and China's trading giant tie up for grain puchasing
Itochu Corp. and China's state-owned food trading conglomerate will team up to jointly buy grains, dairy products and other goods from around the world.
The Nikkei reported Sunday (August 3) that with producer nations imposing export restrictions amid surging food prices, Itochu and China National Cereals, Oils & Foodstuffs Corp., COFCO, aim to bolster their bargaining position through the alliance.
COFCO will gain access to the Japanese trading house's global business network and distribution channels for securing food, while Itochu will leverage the Chinese partner's purchasing power to negotiate favorable prices on foods bound for Japan.
COFCO oversees China's import and export of grain products. In addition to processing meat, the company is involved producing food oil and beverages. It has a monopoly on wheat imports as well. Its sales amounted to US$17.9 billion in 2007.
The two sides are hammering out the details on issues such as joint procurement in the international market, cooperation in logistics and warehouse management for grains, support for Japanese food manufacturers entering the Chinese market and efforts to expand sales in China of Japanese rice and other products.
China had been a food exporter, but demand for dairy and meat has soared in step with its economic development. In fact, the country is expected to become a major grain importer in several years.
