Leading Hainan agriculture group accelerates globalization

Hainan State Farms Investment Holding Group Co Ltd, owner of China's largest natural rubber plantation base, is accelerating its pace of globalization through international acquisitions, according to Li Dongming, a senior official with the company.

"We will focus our efforts in seeking partners in especially the Southeast Asian countries," he said while was responding to the media about the company's latest deal with an Indonesian company over the weekend. Li is the general manager of capital operation department of the group, which is directly under provincial government of Hainan, China's southern most tropical island province, generating about half of the country's natural rubber output.

On August 21, Hainan State Farms' Singapore-based subsidiary trading firm R1 International Pte Ltd acquired 45 percent of equity of PT Kirana Megatara Ltd, the largest producer of crumb rubber in Indonesia, and 62.5 percent of equity of Singapore-based Archipelago Rubber Trading Co Ltd, at a total price of $137 million.

After the acquisition of the Indonesian company, Hainan State Farms will control more than 18 percent of the Indonesian market share.

"The move is of mutual benefits to both sides," Li said.

"It will add an annual capacity of 720,000 tons to the group, and expand its international market share to 10 percent."

"The State Farms group is building up its confidence through the deal."

Li added it would also help the KM company get more access to the Chinese market as China is the world's largest rubber consumer, accounting for 39 percent of the global consumption of natural rubber. In addition, the KM company will serve as a bridge for the group's going-out strategy, he said.

Li added he believed the trade cooperation will help promote cultural exchanges and enhance communication between the two countries.

He said the deal was also one of the group's practice to involve itself in China's Belt and Road Initiative, a development strategy launched by the Chinese government with the intention of promoting economic cooperation among countries along the proposed Belt and Road routes.

"The group boasts an annual domestic natural rubber capacity of 400,000 tons. We aim to build the group into a world brand with an international influence in the agriculture industry, especially in rubber," Li said.

"It will also seek business opportunities in the global market of tropical crops and animal husbandry."

He added the group was making efforts to improve its technical standards and management model in rubber processing and trading.

The group, restructured from Hainan State Farms Bureau, has a history of about 60 years, and the Hainan State Farm Group in 2015 is a large agricultural enterprise group, which has more than 60,000 staff workers, takes a leading role in the sectors of natural rubber, tropical modern agriculture, tourism, real estate and financial service in Hainan.

"The acquisition will not only improve the market share of the group, but also help promote the transformation and upgrading China's rubber industry," Zhang Desheng, an expert of natural rubber and vice dean of the Economics and Management Colleges at Hainan University, said on Saturday.

"The acquisition was a remarkable step for the group's globalization strategy."

"While accelerating its integration with the global chain of the rubber industry, the deal will also help optimize China's international industrial distribution and upgrade the country's competitive power in the rubber industry."

He added the move will also serve as an example for future agricultural cooperation between Hainan and Southeast Asia countries.