Shanghai Focus Biological Technology Ltd, controlled by Huifeng Agrochemical Ltd, recently cooperated with AMVAC(American Vanguard Corporation) to launch a joint venture in Hong Kong, Huifeng AMVAC Innovation. The joint venture is said to have focused on research and development as well as technical transfers. As a prime industry player in China, Huifeng has a reputation in the international market for supplying high-quality pesticide technical. Why would Huifeng cooperate with an international partner to establish such a joint venture? What is the business line of Huifeng AMVAC Innovation? What impact will it bring to Huifeng’s traditional business? And what is its strategic importance to Huifeng’s overall business? To find answers to these questions, AgroPages recently interviewed Jin Wenge, the vice president of Huifeng Agrochemical Ltd, who presented us with a new image of Huifeng, indicating brighter prospects at a higher level.
External Pressure + Internal Motivation
Over the last two years, great changes have taken place in the global agrochemical market. The external environment has seen low prices for agrochemicals, and the generally weak economy resulted in poor demand. Internally, industry mergers and acquisitions have been going on intensively, and multinationals have tried to cooperate with each other, creating a profound impact on global agrochemical enterprises.
As an internationally reputed pesticide supplier, Huifeng needed innovative development and a new source of growth to cope with the present business environment and market situation. Benefiting from Huifeng’s year-long investment in independent innovation, the company has created several new sources of growth with considerable potential, such as bacterial disease solutions.
The establishment of the joint venture gives us the benefit of new opportunities created by the new round of mergers and acquisitions.
Huifeng is prepared to utilize the joint venture to deliver our innovative product and application experience to the global market, complementing our existing business. In sharing Huifeng’s innovative outcome with our global partners, a higher return on investment is generated for shareholders.
Domestic Two-Wing Development + International Innovation Deployment
Domestic Two-Wing Development
The traditional business is the cornerstone of Huifeng. The company will continue its core business of producing high-quality pesticide technical to provide customers with a stable product and service. In the meantime, the company is determined to achieve its two-wing development target, where its industry chain will focus on pesticide, but the business will extend upstream and downstream.
Through the establishment and operation of the e-commerce platform www.16899.com, Huifeng has extended its downstream business to agricultural material supply and service. Although the agricultural material business experienced hard times in 2016, this e-commerce platform has started to take shape with a rapid increase in sales. Beginning with the sales of generic products, the platform has started selling new, diverse products, including those registered in China for the first time, exclusively registered products, and several patented products. In the years ahead, the e-commerce platform will stick to its business philosophy of “authenticity, traceability, good quality, good price, innovation, and brand establishment” and will endeavor to select more novel products to present a specialized platform that brings real benefits to farmers.
Huifeng’s upstream industry is going to expand to include warehousing, trading, and supply chain management. With the advantageous location of the petrochemical storage unit, Huifeng will build a supply chain partnership with upstream/downstream enterprises and industrial parks in the surrounding areas in a bid to establish an influential chemical raw material marketplace in eastern China, which is expected to become a new source of profitability for the company.
Furthermore, Huifeng is prepared to step into financial services by creating an industry investment fund to provide investments and value-added services to promising and competitive enterprises in the sectors of public health, the chemical industry, agriculture, science, and technology.
As a whole, Huifeng is going to transform from a production-focused enterprise into a platform-based enterprise with diversified business development.
International Innovation Deployment
Unlike other technical material manufacturers, Huifeng was initially launched as a market-driven formulation manufacturer. Through market research in China, Huifeng has formed a relatively complete set of bacterial fungicide solutions, which could solve farmers’ problems of scarce or ineffective pesticides to combat bacterial disease.
Bacterial disease control is a globally recognized challenge, for which the means of control, technology of control, and division of the market are not satisfactory. The situation restrains prime agrochemical companies from paying due attention to this market because of the limitations of their business system and strategic development, thus causing a shortage of effective products and solutions. However, this leaves the market space open for development. The initial intention of Huifeng is to deliver to the global market these products that have been proven effective in China to really address the farmers’ problem and bring benefits to farmers worldwide.
In terms of product applications, Huifeng has accumulated rich experience. With the joint venture with AMVAC, Huifeng will follow the market demand and provide diverse solutions to create new market value. This creates a fundamental difference from the usual homogeneous competition.
Why this Partner? Common Values + Common Interest
Global resources are shared widely in today’s world, so Huifeng ought to select partners who share the same values and interests to reach a common understanding on a win-win basis.
Based in the United States, AMVAC has maintained 10% annual growth for over a decade, which is far higher than the average of the industry in the country. It is a fast-growing company with strong marketing experience and numerous resources.
Huifeng will be cooperating with AMVAC in technical research and applications for a specific market. On the one hand, Huifeng’s intellectual property and innovative products will be promoted in North America; on the other hand, AMVAC’s intellectual property products and pesticide precision application system will be promoted in China.
At present, some technical transfer programs have been agreed upon between Huifeng and AMVAC, which will be implemented by the joint venture. The technical transfer programs include the SIMPAS application of AMVAC, which can reduce considerably the amount of pesticide used without compromising efficacy and exponentially reduce the environmental risk and safety risk for operating personnel. In the meantime, electronic recordkeeping will help with supervision and technical analyses. This pesticide application apparatus and technology conform to government policies on the reduced use of pesticides, environmentally friendly applications, and health requirements. If this application gains ground in China, it will become a milestone achievement for the Chinese agrochemical industry. As a follow up, the joint venture is prepared to launch and promote agricultural UAV（Unmanned Aerial Vehicle） spraying in various regions of China.
Constant Commitment: “3 Respects” + Shareable Achievement
Huifeng has clearly realized the importance of managing the relationship between its existing business and that of the joint venture. To do this, the company will follow a “3 respects” concept: respect for intellectual property, respect for intercultural differences, and respect for the partners' wishes.
Based on its traditional business, Huifeng will continue its input in the QEHS system to fulfill its business commitments. So far as the business of the joint venture is concerned, Huifeng is fully confident of the unlimited potential for expanding the business in the future.
The company is ready to share its success with its partners along the way for all business opportunities created by the intellectual property products.