Edible Oil Enters Oligopoly Era, Small Brands Face Life and Death

After 2014 and 2015, the edible oil industry is facing the fate of shuffling, and has really entered the oligarchy era of Zhongliang and Yihai Jiali. At the same time, large and powerful enterprises such as Hengda have come to stir up the situation, small and medium-sized edible oil brands have entered a state of near death, and have to hold the group heating to gain a first-line vitality.

Ten businesses close in a year

"As far as I know, last year and the year before last, about 10 enterprises have quit the edible oil industry." Xu Jianfei, director of Huahong Investment Co., Ltd., told China Business News.

Xu Jianfei has worked in the field of edible oil for many years. He was a senior member of the central grain and oil enterprises. "The current situation is similar to that of ten years ago. Many enterprises will close down. The market oligarchy's share has increased, while the foreign capital has further seized the city.

Since 2014, commodity prices in the international market have fallen sharply, and soybean prices have fluctuated sharply. Many enterprises have stopped production or withdrawn directly from the brand market in the face of market price slump, loan difficulties and other factors.

At the same time, sales of goldfish grew by 11.6% in 2014, and sales of Fulinmen grew by more than 10% in 2015.

"Now the grain and oil giants have dominated the world and run across the grain and oil rivers and lakes. A grain and oil company can account for about 50% of all industrial sectors, which implies another danger. When an enterprise accounts for more than 15% of its share in the industry, it is enough to attract the attention of the industry enterprises to its monopoly trend. Then the large scale and high concentration of this kind of grain and oil giant directly lead to the difficulties of the survival of small and medium-sized enterprises. The theory of economic balance has always existed. When an industry or an industry is monopolized by an oligopoly, then SMEs will have difficulty in making profits. This is one of the main reasons why small and medium-sized grain and oil enterprises and private enterprises suffer terribly. Ninety-three Oil Group Yang Baolong has publicly stated. However, Yang Baolong refused to comment further on which grain and oil company he referred to.

In the history of China's soybean imports, there has been a similar situation. In 2004, soybean prices fluctuated dramatically. "Many oil companies went bankrupt or were acquired by foreign capital."

According to some data, more than 70% of domestic oil extracting enterprises are controlled or participated in by transnational grain dealers, which has formed the situation of four major grain dealers holding or participating in Fulinmen, Luhua and other major brands. "Foreign capital does not care whether these crushing factories are profitable or not. They only care about letting Chinese crushing factories buy their soybeans through share control." Jiusan Oil Group has said.

Industry insiders told reporters that such a situation has made the market price of grain and oil in China higher and higher. Some foreign-owned or private crushing enterprises either choose to raise the price of refined oil or choose to stop production, while the state-owned enterprises undertaking the task of maintaining supply can only operate with difficulty in the loss.

"When the price of edible oil rose around 2008, the relevant ministries and commissions regulated prices. Why only regulate these enterprises? Because of its high concentration, it is easy to control. Together, these enterprises account for 50% to 60% of the national soybean processing industry, and the concentration of the industry has formed this monopoly pattern. Yang Baolong said.

The Development and Reform Commission once laid out small package oils

It is not only downstream small package oil that is threatened by the price of oligarchs in the market, but also the strength of international capital in the upstream and upstream markets.

ADM, Bangji, Cargill and Louis Dafu are known as the "four major international grain merchants". The state also clearly stipulates that foreign capital is not allowed to control oil and grease pressing factories. Although soybean processing has such explicit provisions, at least two of the four major grain merchants have opened new factories in China due to the flexible local investment policies.

The continuous infiltration of foreign capital has also increased the vigilance of the Development and Reform Commission.

At the beginning of 2011, the soaring CPI impacted the nerves of the NDRC, and the prices of small packages of edible oil, which are closely related to consumers, rose one after another.

Because the brand "Golden Dragon Fish", which occupies the largest share of China's edible oil market, belongs to Yihai Jiali Group, and Yihai Jiali's foreign investment status makes it inconvenient for the Development and Reform Commission to issue mandatory price limits as it does for central enterprises. The NDRC eventually adopted an "interview" approach to prevent the price increase of several major oil and grease enterprises headed by Yihai Jiali.

It is reported that 60% of the 94 oil squeezing enterprises in China are purchased by foreign capital or have foreign investment background. For the small package oil market, the regulatory power of the Development and Reform Commission is obviously inadequate.

In fact, whether it is grain or soybeans, the country has stockpiled them and sold them to specific enterprises through targeted sales, enabling them to squeeze low-cost soybeans and produce low-cost cooking oil. "But we find that the way of reserving raw grain alone is not enough to adjust market prices quickly." "Therefore, our future idea is to process raw grain into finished grain for sale," the NDRC source told reporters.

"The idea of the NDRC is to enter the small package oil market and adjust prices quickly." The senior management of China Grain and Oil Storage Company confirmed that the entry of China Grain Storage, which has always been famous for its grain reserves, into the terminal market of small package oil seems to have the meaning of national responsibility, and introduced the "Jinding" small package oil.

Initially, Jinding Small Packaging Oil did pose a certain "threat" to the goldfish in the middle and low-end market, but due to the adjustment of strategic thinking of medium grain storage, Jinding Small Packaging Oil