Archer Daniels Midland Company (ADM: 25.78 0.00 0.00%) recently announced a strategic investment of $100 million in Agricultural Bank of China , and the opening of an office in Beijing, marking the company’s goal of encapsulating the growth opportunities prevailing in China and Asia.On June 11, both the organizations signed a memorandum of understanding, enclosing the terms and objectives related to the agricultural development and identification of strategic growth prospects in China. Archer said that China has a sizeable agricultural market with huge demand and supply.
Archer’s objective is to capitalize on the promising opportunities in China’s farming sector. Both the organizations are competent in their respective fields and come together to benefit from each others’ expertise.
Further, the planned office in Beijing is expected to commence by the end of 2010. The company said that Asian business activities will be headed by Ismael Roig, Vice President and Executive Director, who will be accountable to John Rice, Executive Vice President, Commercial and Production.
Based in Decatur, Illinois, Archer Daniels is one of the leading food processing companies in the world and leverages its massive production and transportation network to derive a competitive advantage over its rivals. Moreover, management is focusing on a brisk expansion strategy, which bodes well for its future operating performance.
However, intense competition from other established players and exposure to adverse fluctuations related to price and supply of agricultural commodities undermine Archer’s future growth prospects. This leaves limited space for above-market performance of the company.
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