Case Study Of China Food Asset Divestiture

On June 30,2020,the "Three-Year Action Plan for the Reform of State-owned Enterprises(2020-2022)" was approved by the State Council Deep Reform Commission at the 14 th meeting.The meeting clearly pointed out that the focus of deepening the reform of state-owned enterprises is to continue to promote the merger and reorganization of central enterprises,highlight the main business,make them bigger and stronger,and optimize the allocation of state-owned capital.The professional integration of central SOEs has formed three major modes of "iron tower model","asset transfer" and "business collaboration" in the long-term exploration and practice.At present,the most widely used one is "asset transfer".Divide non-core and non-advantaged businesses so that resources are concentrated on advantageous enterprises and main businesses.As a subsidiary of a central enterprise,China Foods sold all its non-beverage sectors from 2016 to 2017,forming the only business platform under COFCO that specializes in the beverage industry.The move of China Foods to divest the non-beverage business this time is based on the specialized platform strategy of the controlling shareholder COFCO Group,through the divestiture of assets to integrate resources,focus on the beverage industry,and adjust the organizational structure of the enterprise to improve the operating efficiency of the enterprise and realize the enterprise’s sustainable development.By analyzing whether the divestiture of non-core businesses of Chinese food companies has brought value and the path of generating value,this thesis can enrich the case studies of asset divestitures and provide guidance for future corporate asset divestitures.This thesis takes China Foodstuff Co.,Ltd.,a subsidiary of a state-owned enterprise,as the research object,and analyzes the reasons,methods and processes of its asset divestiture using theories such as financing theory,efficiency theory,nuclearization theory,and resource optimal allocation theory.Indicator method and event study method analysis methods are used to evaluate the impact of stripping behavior.First of all,this thesis provides the basic ideas and reference for the research work of this thesis by analyzing the background and research significance of the divestiture of state-owned enterprises in my country.At present,the theoretical research on the concept,motivation,method and performance of asset divestiture has been in-depth.However,relevant case studies are lacking and little literature touches on the analysis of the pathways through which divestitures produce effects.To this end,this thesis analyzes the whole process of the four asset divestitures of Chinese food companies in detail,and discusses the background and impact of the divestitures of Chinese food companies,in order to provide a reference for Chinese enterprises.Secondly,after a brief introduction to the organizational structure and main business of China Foods,the article describes in detail that under the background of the professional transformation of the controlling shareholder COFCO,the poor operation of the non-beverage sector and the reorganization of joint ventures,the beverage business volume has increased significantly.Through four consecutive asset divestitures,China Foods has become a listed company with beverages as its only business.Finally,this thesis discusses the effect of China’s food asset divestiture from three aspects: market response,financial performance and operating effect,and explores the ways and reasons for China’s food to produce the effect.The results show that the asset divestiture implemented by China Foods is a strategic divestiture for the company’s longterm development.Through four asset divestitures,China Foods has improved its financial performance,avoided its operational risks,and enabled investors to obtain short-term excess returns,thus achieving the goal of corporate strategic focus.The divestiture was completed under the guidance of the parent company’s professional platform strategy policy,which enabled China Foods to avoid cross and competition in business and management with other COFCO subsidiaries,and the asset purchaser was a related party.performance risk arising from asset divestitures.This thesis draws the following inspirations from the analysis of asset divestitures of Chinese food companies.First,companies can promote corporate strategic transformation through asset divestitures.Second,when using asset divestiture to integrate resources,we should look at the changes in the economic environment from the perspective of strategic development,and focus on the operating conditions and management methods of the company,actively divest loss-making businesses,and highlight the core main business.Third,an appropriate divestiture plan should be formulated according to the asset divestiture goal.Finally,an enterprise should pay attention to business integration before and after divestiture,steadily advance asset divestiture,and prevent market risks.