After 14 years of pioneering investment in the Chinese sugar industry, Guangxi Nanning East Asia Sugar Company, a business arm of the Thailand-based Mitr Phol Group, has grown into the second-largest sugar manufacturer in China.

Nan Hua, the largest manufacturer, produces about 900,000 tonnes of sugar a year while Guangxi Nanning accounts for around 870,000 tonnes.

Now Guangxi Nanning's assets have risen to above Bt8.6 billion from an initial investment of Bt3.69 billion.

As a result, Guangxi province's sugar income has reached Bt15 billion, a threefold increase from 13 years ago.

Luo dian Long, secretary of the Guangxi Chongzuo Municipal Committee of China, said Guangxi Nanning had helped develop the country's sugar industry during its time in the region, making the crop one of the key earners in southeastern China.

The province aims to become one of the world's key areas for sugar-cane production to support the growing demands of the Chinese. Others leading producers include Brazil, India, the Philippines and Thailand.

Luo said the company had not only helped increase government income by entering a joint venture with the Chinese government, but had also transferred knowledge and technology to rural people.

Currently, Guangxi Nanning holds the major stake in its five mills in Guangxi, and that stake rose from 60 to 90 per cent last year.

Last year the company paid Bt2 billion in tax to the Chinese authorities.

Although two sugar mills in the province are joint ventures with a British firm, Guangxi Nanning says its mills are the most efficient in the country.

The province has 15 mills but Guangxi Nanning claims its five mills can produce half of the region's sugar. The company achieved a 9-per-cent market share in China last year, and this year it plans to lift that to 10 per cent.

The company's five mills are in Funan, Chongzou, Tuolu, Ningming and Haitang.

Wei Jiajie, secretary of the Ningming Communist party committee, said the conglomerate of Guangxi Nanning with the Chinese government had increased farmers' incomes.

About 800,000 people or 52 per cent of the province's farmers produce sugar cane and receive on average Bt15,000 a year compared with Bt5,000 13 years ago, said Wei.

He said the government had benefited from its cooperation with Guangxi Nanning because it helped developed roads and other rural services.

Despite its high sugar production, China's imbalance of supply and demand causes shortages and means the nation imports the crop in high volumes. China's sugar consumption was 13 million tonnes last year and this is set to increase to 17 million tonnes by 2010.

Guangxi Nanning said its research suggested the China's demand for sugar would increase by 6 per cent a year from the current 9.5 kilograms per person and the company is confident its investment in the region will pay long term dividends. The company said its improvements had allowed Chinese production to overtake Thailand's sugar industry this year.

Sugar is also increasingly being spoken about as a strategic product as rising oil prices have increased interest in the use of ethanol as a fuel, which can be made from sugar cane and is already used extensively in Brazil.

The retail price of sugar in China is Bt35 per kg.

Petchanet Pratraungkrai

The Nation

GUANGXI, CHINA