Syngenta eyes Chinese corn potential with Sanbei investment
Sanbei with a view to jointly developing corn seed products to meet
growing demand driven by changing food patterns and agronomic
trends.
Swiss Syngenta has operated in China for the last decade, offering both seed and crop protection products.
But the company has spied new opportunities as the economy in China is growing and more food is needed to feed the growing population.
Sanbei is a leading player in the development and distribution of corn seeds in China.
A spokesperson told FoodNavigator.com that dietary patterns in the country are shifting "from green to protein", spurring demand for meat.
This in turn calls for more feed - of which corn is a major component.
Another factor is the huge demand for energy in China, which goes hand-in-hand with growing awareness of biofuels.
Agricultural trends, such as the decline in arable lands, also create demand for high-yield, disease-resistant crops.
By combining their technology and knowledge of corn, the two companies expect to create more varieties of corn seeds and different products that can combat disease and environmental factors, and to speed development of new products to suit the Chinese market.
Michael Mack, chief operating officer of seeds at Syngenta, said: "[Sanbei] has strong commercial operations and an attractive product portfolio.
Together with Syngenta's expertise in corn breeding this will result in improved and broader product availability for Chinese growers."
The deal is not regarded as one that will have a bearing on Syngenta's global operations.
Syngenta will not exploit Sanbei's technology outside of China, since Chinese law states that home-spun intellectual property should stay in the country.
The Sanbei deal is expected to increase Syngenta's corn business in China significantly.
In 2006 Sanbei reported sales of approximately US $30m, but due to the fragmented market Syngenta prefers to not discuss market share.
The terms are not being disclosed, since the transaction is subject to the Chinese authorities' approval.
Syngenta expects no problems, but such procedures can take quite some time, and it is difficult to predict when the transaction will be concluded.
In full year 2006 Syngenta's earnings per share were up 14 per cent to $8.73, crop protection sales were up 1 per cent at $6.4 billion and new product sales up 25 per cent to $985 million.
Although sales were one per cent lower than the previous year at $8.05 bn, the company was bullish about its performance.
