The firm, which specialises in the research and commercialisation of forestry biotechnological techniques, has decided to diversify its business into the sale of organic products such as vegetables, fruit, rice and oil.
Currently, the firm’s main business is cultivating poplar trees.
To pave the way for the new business, Guangzhou is looking at entering into a sales and marketing agency agreement with a Chinese incorporated firm, Shihua, which is wholly owned by the controlling shareholders cum management of Guangzhou – Madam Su Min and Mr Song Xuemeng.
Shihua specialises in the production and sale of organic agricultural products in domestic Chinese and export markets.
If and when Guangzhou’s new business starts, it intends to first sell and distribute organic vegetables from China to the Singapore market.
Future plans include expanding the product range offered and the number of markets it supplies.
Chairman of Guangzhou group Susan Su said: “Growing affluence, increasing health awareness and environmental consciousness among Singaporeans will help to drive the demand for organic food products.”
Harvesting its current main product, fast-growing poplar trees, involves long cultivation and maturity periods.
Poor weather and fluctuating timber prices have made it difficult for the company to predict the outcome of these harvests, making revenue and cash flow streams irregular.
“In recognition of such limitation, the company has been on the lookout for business opportunities in sectors which can generate regular revenue and cash flow with potential for long-term growth,” Guangzhou said in an announcement put up on the Singapore Exchange yesterday.
An extraordinary general meeting will be held to seek shareholders’ approval for diversification plans.
Citing information from Datamonitor in December last year, Guangzhou stated that the organic food market in the Asia-Pacific region has grown at a compound annual growth rate of 15.9 per cent a year over five years, reaching a total value of US$2.1 billion (S$2.7 billion) last year.
Article source taken from The Straits Times, November 20 2010
– by Harsha Jethnani