China's major state-owned soya crusher Jiusan said on Friday it had launched another plant in the northern port city of Tianjin to prevent the entire industry from being taken over by foreign companies.
Last week, Heilongjiang Jiusan Oil and Fat Co, Ltd, opened a 5,000-tonne-a-day plant in Tianjin, another step in the demise of China's crushing industry suffering from a huge overcapacity that has wiped out profits most of this year.
"My aim is very clear. I am not expanding blindly. I am trying to survive," Tian Renli, Jiusan president, told Reuters.
"(Otherwise) the whole domestic soya market would be lost and controlled by foreign firms," he said in an telephone interview.
Jiusan, headquartered in China's top soya producing province of Heilongjiang, has emerged China's largest soya processor, with an annual capacity of 5.5 million tonnes. It opened another 5,000-tonne-a-day plant in the northern port city of Dalian last year. The plant in Heilongjiang only processes domestic non-genetically modified soyabeans.
China's Soyabean industry, the world's largest, is already plagued by overcapacity. The industry has more than 70 million tonnes of capacity, of which half is idle.
Tian said Jiusan's three plants were now running at full capacity despite negative margins.
It planned to sell soyameal, manufactured in Tianjin from imported genetically-modified soya, mostly in the northern provinces of Shandong and Hebei, while shipping some to Guangdong in the south, he said.
Asked if it could compete in the south against plants based there, the president said Jiusan enjoyed lower power tariffs and cheaper labour in northern China compared with the south.
He said he expected the industry to see a major restructuring in the coming two years with only five or six major crushers left at the end.
"I think most small crushers or state-owned crushers will be gone or merged by foreign firms. It is quite terrific," he said. He said some small crushers especially in the north Shandong areas were suffering from heavy debts. "The government is to be blamed for the overcapacity. They have blindly introduced so many foreign investors, which have squeezed the national industry and farmers' profit."
Being the only major state-owned firm, Tian said, Jiusan had to be big to compete against foreign giants, like Wilmar Group, Bunge and Cargill that have plants in the consuming east and southern coastal areas and controlled half of the industry.