Argentine firms expect to grow in China

Argentine agricultural companies in China are expressing confidence about their ability to expand their presence and have more sales in the world's second-largest economy.

"China has great potential for our business and we are looking forward to selling more processed food and farm products to China," said Rafael Paz, head of Aceitera General Deheza SA's trading department, an agribusiness company in Argentina.

Aceitera General Deheza, which is among the companies that crush the largest amounts of soybeans in Argentina, said it now goes through trading companies to sell soy oil to China. Paz said he believes diversifying China's imports from Argentina will be the best way to develop trade between the two countries.

Argentina sells much of its soybeans and soy oil to China. No less than 80 percent of the South American country's soybeans were sold to China in recent years.

In 2011, China's total imports from Argentina stood at $6.2 billion and its exports to Argentina at $10.6 billion, Argentine official data showed.

In February, China and Argentina signed an agreement on corn trade, a pact that was to take effect on April 20. But China prohibits the imports of some varieties of genetically modified crops that are popular among South American farmers, and the shipments therefore have yet to start.

During a trip to four South American countries in June, Premier Wen Jiabao signed several trade and cooperation agreements with Argentina President Cristina Fernandez de Kirchner, including accords pertaining to nuclear energy, to Chinese imports of Argentine horses and livestock and to some farm products. The two countries also agreed to a $2 billion loan that will finance improvements to Argentina's Belgrano Cargas railway.

Chinese analysts believe enhanced trade relations between the two countries will lead to Argentine farm products being sold at more attractive prices in Chinese markets.

"Argentina's export tariff has raised the price of its farm products," said Gao Yanbin, a senior industry analyst with SWS Research Co Ltd. "But they can still compete with products from Brazil and the United States.

"If the tariff can be reduced through closer cooperation between the countries, Argentina's products will be very popular in China."

Some Argentine companies, to make use of this opportunity, have decided to invest in the Chinese market. Molino Canuelas SA, another agribusiness group in Argentina, is in talks with Chongqing Grain Group Co Ltd, a State-owned grain company, about making investments together.

The two companies plan to start by putting $10 million into a soybean farm and dairy farms in the South American country and then opening several flour mills in Southwest China's Chongqing municipality, said Claudio Canepa, industrial manager of the Argentine company.

"China's market is the future of our business," he said.

zhousiyu@chinadaily.com.cn