Based on my personal opinion, currently, there are four important dilemmas which the top 30 feed companies in China face.
An important trend in recent years is the increased internationalization of global markets. Foreign enterprises, such as CP Group Thailand, have achieved great success by exploiting the Chinese market. Chinese feed enterprises, such as New Hope Group, have expanded overseas with the prospect of claiming many achievements in foreign countries like Vietnam. These facts signify the importance of the saying that “business knows no borders.” Throughout the course of development, to be successful, enterprises could pursue neither a closed-door nor isolationist policy.
The successful growth development of China is accompanied by the broad expansion of capital, technology, markets; these accomplishments greatly encourage Chinese feed enterprises to pursue internationalization. However, the opposing viewpoint insists on localization, based on the notion that China is the market with the highest growth potential in the world today. Proponents of this viewpoint believe there is no need to achieve internationalization simpy for the sake of internationalization; that is, there is no need to strive after something unattainable, meanwhile forgoing substantial opportunities immediately at hand. Moreover, the scale of Chinese feed enterprises the will of shareholders management teams may yet have reached the level required to successfully expand abroad. As is often the case, operating developing businesses far away the core, can lead to failure – as encapsulated by the old Western proverb, “the farther away hometown, the closer to failure.”
In weighing the pros cons of localization versus internationalization, it is difficult to conclude which course is preferable. my point of view, the primary strategy of Chinese feed enterprises should be to establish dominance in the domestic market, then move to neighboring, but less-developed countries such as Vietnam, Laos, Cambodia, Burma, North Korea, Kazakhstan. Indeed, in spite of larger market sizes, it would be much harder to invest in neighboring but well-developed countries such as India, Russia, South Korea, Japan, Australia.
尽管全世界大多数企业都是靠“诺基亚模式”即专业化经营，专注于唯 一选定的领域并取得成功；但也有如美国GE(通用电气公司)者横空出世，凭借多元化发展取得巨大成功。中国正处于由混沌初开向秩序井然的成熟社会过渡的时期，眼前活生生的例证是：东方希望集团靠雷电竞备用网站起家却以电解铝行业成为中国私营企业的翘楚；新希望企业千军万马做雷电竞备用网站，而其最 大的收益却来自不经意间投资入股的银行业和房地产业。近年新希望依靠资本力量投资控股或入股多家农牧企业，成为因多元化而成功的鲜明案例。
Even though many of the world’s successful enterprises, such as Nokia, have pursued a highly focused strategy in a specific sector industry, other large enterprises, such as GE, have attained even greater success by pursuing a highly-diversified strategy. Currently, China is in a transition point, moving a developing, volatile, informal market to a more mature market with rules, regulations, transparency. For instance, East Hope Group initially was a feed business, but it soon grew into one of China’s major private aluminum enterprises. Additionally, in its early stages, New Hope Group invested in banking real estate, instead of focusing its resources on the feed business. Recently, New Hope Group has a robust capital base due to its investment holdings equity participation in several agriculture companies, which have helped the company to diversify thereby lower the amount of risk to which it is exposed.
今天的中国社会，政商关系密切，因一业兴旺而积累了足够资金和庞大社会资源，从而更加有利于开展多元化的经营。坚持专一化、抗拒多元化，最 终才能走上成功之路，是被全世界证明了的经验，但在中国却并不见得灵验。高度专业化企业构成的群体强大而高 效，如：微软、IBM、英特尔因高度分工、密切合作而令美国成为IT业霸主；而过度庞杂的巨头企业，如日韩财团政商勾结虽使其崛起迅速，却最 终阻碍行业进步甚至危害社会的公正。
Today, the relationship between government companies has largely been liberalized. The accumulation distribution of wealth, social benefits, resources the pursuit of diversification are based on the decisions strength of individual enterprises. The most successful approach might be found by examining cases regarding the development of specific businesses industries, but these examples may be applicable to China. Highly specialized companies such as Microsoft, IBM, Intel, which began in the U.S., have become global leaders in the IT industry. On the other hand, some conglomerates in Japan South Korea may have negatively impacted the overall development of the countries because many deals were made with the respective governments, often behind closed doors.
The problems created by focus diversification should be decided by each individual enterprise, based upon rational choices about maximizing wealth creation, maximizing economic impact, becoming a leader within a particular industry sector. I prefer to be an expert in a given field.
The traditional manner of the feed industry is to specialize in feed production to increase complexity, enhance technology, improve quality. This traditional manner has encountered challenges of the broiler industry, as exemplified by the comments, “mere broiler feed producer.” The trend is toward integrated production, by assembling the different branches of the process: breeding, hatching, feed supply, epidemic prevention control, feeding, slaughtering, meat processing. This trend will likely also affect pork, layer ruminant industries. The trend has been the case in America; for example, Smithfield Foods is representative of Trus Model. Large scale production operations obviously affect the market price should lead to economies of scale. However, in recent years, Smithfield Foods presented signficant losses in its annual financial report. This data suggests imperfection with the Trus Model.
In fact, this trend toward integration can be particulary challenging, especially if the industry as a whole is consolidating. The challanges lies in converting innovation execution expertise in a highly-specialized domain, into a broader expertise in integrating other companies into a coherent structure, operating each component successfully synergistically. In a sense, compared with North American companies, European ones tend to be even more specialized. Many family farms are under the restriction of quota allocations limited scales of operation, formal contracts with specialized feed companies specialized slaughterhouses. To protect the production soundness of the market, the government has implemented direct control of the process of production. Government does this through the process known as risk-sharing: it controls each branch of production a large amount of farms to have risk characteristics that people are comfortable with, thereby reducing crises.
我仍然认为欧洲的模式更适合中国国情，然而这种模式在欧洲能够发挥功效，第 一有赖于一个专业化的畜LOL雷电竞政府管理部门，既能未雨绸缪地防范又能力挽狂澜地制止；第 二有赖于一个高度诚信的商业文化，各生产环节真 正让契约有效执行。
I still consider the model practiced in the EU to be preferable. The EU model is accomplished by maintaining crucial controls over operation of the specializated livestock chain. In addition, well-functioning commercial markets the principle of good faith are essential to a healthy economy.
A firm may raise funds in financial markets by issuing equity, such as common stock shares, which represent claims on the net income (income after expenses taxes) assets of a business. China has had active capital markets for many years, therefore there are many publicly-listed feed companies. Companies listed in China have tended to have extraordinarily high P/E ratios, creating sudden wealth large gaps between listed unlisted companies. It is possible that some weaker firms may actually be most eager to sell securities to unwary investors, the resulting adverse selection problem may keep stock prices in bubble territory. Furthermore, because of the market structure lack of shareholder rights today, once an investor has bought a security, thereby providing money to a firm, the recipient firm may be incentivited engage in riskier activities to commit outright fraud.
我们必须明白，企业上市或曰公众化只是发展企业的一种手段，绝非经营企业的目的；企业上市公众化也不是企业发展的唯 一途径，对于很多企业而言并不是最 好的手段。德国宝马公司、美国嘉吉公司都是世界顶 尖的大企业，他们却始终保持着私人企业的不坏金身。企业上市后将面临更严格的公众监督和机构监管， 同时也会显著提高企业的运营成本。而为了上市虚报业绩、编造项目可能会使这些企业最 终失去竞争力。在现实中国资本市场的虚高股价之下，保持理性异乎寻常的艰难，但我们必须实事求是。
But Chinese firms shareholders should be clear about the following concept: Going public is just an instrument of the company to finance future development, but it is the final purpose of operations. In contrast, both BMW Cargill are private holding companies well-known in the world for many generations. There are stringent reporting requirements for public companies. Their bookkeeping must follow certain strict principles, their books are subject to periodic inspection, they must make certain information available to the public. These necessary duties increase the cost of operations. Unfortunately, in order to go public, many firms in China create false financial statements fabricate profit loss accounts; but such firms will only end in bankruptcy, to the detriment of shareholders, customers, employees, society. With capital markets supporting such overvalued stock prices, it is unlikely that rational decision-making will be achieved incentivized in the near-term. But, it is necessary to be honor pragmatist.
In addition to the challenges mentioned above, a major concern within the industry is the substandard deteriorating FSQS (food safety quality service). Many problems in the food industry have been discovered, such as melamine, which have caused the feed industry to be held at fault by the public. Such debacles, have resulted in increased supervision regulation of the industry restrictions imposed on many companies. Going forward, regulation red tape continue to worsen impose greater burdens on companies. The livestock industry is now under huge pressure, strangled companies reduced . Moreover, the world is underoing a dramatic increase in human activity, severe damage to the environment, ecological disasters, the likelihood of animal-derived epidemics. Considering all of the above components, the feed livestock industries are under negative status have recently become even higher-risk businesses.