♦ What is happening to the Chinese agrochemical market?
♦ What strategic adjustments are being made by multinationals?
♦ Companies from different terminal markets wish to cooperate with Chinese enterprises
♦ GLP Lab and registration consultancy – an indispensable part of pesticide value chain
♦ Making full exchanges to seek possible cooperation
Following preparations for the event, the 2018 China Pesticide Exporting Workshop (2018CPEW) was successfully held in Hangzhou, China, from July 4 to 6, 2018, hosted by AgroPages and sponsored by Hailir Pesticides and Chemicals Group, Lier Chemical, Dr. Knoell Consult, Exponent International, AgriFor Scientific and SinoUnison Technology Ltd. The event is also supported by Hangzhou Udragon Chemical, Wynca Group and Ninghua Group.
The workshop saw the participation of some 400 people from nearly 30 international pesticide companies, dealers and importers, as well as from over 200 Chinese enterprises. The participants included business practitioners and stakeholders covering all sectors of the agrochemical industry chain, such as government bodies, agrochemical enterprises in the terminal market, legislation institutions, consultancies and lab service. Participants had the chance of sharing information on the latest industry development and the insight into different market locations. Keynote speakers provided audiences with their knowledge and experience in handling the key steps of market exploration.
It should be noted that AgroPages hosted such an international business workshop for the first time with the participation of international and Chinese agrochemical enterprises. The workshop has proved that there is an unprecedentedly strong desire from the industry for an exchange of information and sharing of knowledge.
What is happening to the Chinese agrochemical market?
At the workshop, officers from Chinese ICAMA ((Institute for the Control of Agrochemicals, Ministry of Agriculture), Ministry of Ecology and Environment and major pesticide technical price analysts were invited by AgroPages to make presentations on China’s import and export data, industry policy and price trends, which would help participants gain knowledge about the development tendency of the Chinese pesticide industry so as to make prior adjustments to the sourcing strategy and development tactics.
Wu Houbin, director of International Exchange & Service Division of ICAMA
, provided a detailed analysis of China’s pesticide export status over recent years in respect of export value, quantity, product variety and destinations of export. Last year, China’s pesticide exports reached $6.76 billion and 1.4676 million tons. The increase in export value is apparent, which is 20.4% up year on year. The quantity of export increased 6.9%. The increase in the export of formulations over the last five years was far higher than that of exports of the pesticide technical, which will continue this way in the coming years. Among the fast-growing export products, plant growth regulator is the variety that has the fastest growth among the exports from China.
Director Wu believed that in 2017, after the New Regulations on Pesticide Administration were put in place, several follow-up regulations and technical requirements issued by the Chinese Ministry of Agriculture became the biggest challenge and also provided opportunities to Chinese pesticide exporters. These regulations and technical requirements led to changes and adjustments for the purpose of optimization of the pesticide product structure, strengthening of administration of pesticide registration and trials, as well as optimization of the pesticide industry distribution. In the future, China’s new pesticide industry distribution will set a higher industry entry requirement on business players with stricter conditions, which may also lead to a further restructuring of activities in the pesticide industry.
The main reason for the supply and price fluctuation of Chinese pesticides lies in the various strict environmental compliance policies implemented by the Chinese central government over the last 1-2 years. At the workshop, Li Xiaoliang, a researcher of the Chinese Academy for Environmental Planning of the Chinese Ministry of Ecology and Environment
, commented on the environmental measures. He said the production permit from the Ministry is essential for pesticide enterprises, as production without a permit shall be shut down. At present, environmental requirement is getting more and more specific and complete. Environmental compliance supervision and administration are becoming more stringent day by day, which require a strict and precise enforcement of the environmental law.
Currently, under the national ecological development circumstance, environmental compliance has become an important criterion for an enterprise to assess whether its business is endangered, whether it has potential for development or whether it is worth being a partner of cooperation. From now on, the accuracy and intensification of environmental law enforcement will continue to be enhanced. Environmental compliance is also a double-edged sword, which brings both opportunity and challenge to Chinese pesticide enterprises.
Global buyers are always concerned about the supply and price trend of the Chinese pesticide technical. Zhang Lanxiang from China’s major pesticide technical trading platform—Sino-Agri Leading Biosciences Ltd
—provided an analysis of the pesticide technical market over the last 4 years. In his presentation, Lanxiang sorted out 6 phases of the Chinese pesticide technical supply beginning from July 2016 until now. He pointed out that from the second half of 2016 till March 2017, the nation-wide environmental compliance inspection caused a delay in production to most of the pesticide enterprises, which resulted in the short supply of goods and led to a price rise. On the other side, the prices of farm products are on the lower side. After the 19th National Congress of the Communist Party of China, following the implementation of China’s “2+26 cities” air pollution transmission control program and the macro-economic policies, now, the market has gradually returned to a rational state. Faced with the new wave, pesticide enterprises ought to strategically plan for procurement. The sooner an adjustment is made, the sooner they grasp a competitive advantage.
What strategic adjustments are being made by multinationals?
In view of the accelerated market integration worldwide and the regional fluctuations of market policies, how will multinationals react? What is the business position they will stick to in their respective strategies?
Headquartered in Hamburg, Germany, HELM has been in existence for over 100 years. More than 100 representation offices have been set up across 32 countries. At the workshop, Nick Read, crop protection product executive manager of HELM, shared with participants the experience of the company in handling the market complexities of each region.
Read said the increasingly stringent pesticide laws and regulations worldwide, the issue of the exchange rate and the challenge of climate change will cause new problems to market regulation. Different regions have a different crop structure and require different product varieties; a business strategy needs to be adapted to local circumstances to launch products specific to local requirement. Backed by HELM’s core competence built by its year-long knowledge, market data and marketing strategy, HELM is dedicated to providing partners with total solutions, and will establish a close relationship with pesticide enterprises and industry partners. Read said that HELM is prepared to work closely with Chinese partners and dealers to jointly provide users with quality service.
Nufarm, which ranks 11th among the 2016 global agrochemical companies, purchases a big volume of pesticide technical each year. David Bury, global strategic procurement manager
of Nufarm, gave a presentation on the global sourcing strategy of Nufarm, as well as the company’s quality-driven business philosophy. Bury said that the sourcing strategy of Nufarm is not a one-off job, but a continuous improvement or correction of any issues identified during the sourcing process each year. Nufarm would use various tooling to understand the financial status of suppliers, market supply situation and to gain all kinds of useful information so as to facilitate a strategic management and effective operation of the supply chain. Of these measures, establishment of a close strategic partnership with suppliers is essential, which is of help to risk control.
Bury said, “A good experience in customer management, a good supply chain and a good product portfolio are our three areas of focus. All our jobs are centered on bringing the best experiences to customers.”
Indian UPL, among the top 10 global agrochemical companies, also came for a speech at the workshop. Ravikiran R. Chaudhari, head of China purchasing of UPL
, explained UPL’s sourcing strategy in China. In his presentation, a very frequent word used was “change”. Chaudhari said that he fully noted the changes that have taken place in the Chinese market, which is now very different from the market one and a half years ago. China’s environmental measures and the industry structural adjustments are attracting close attention from the international market. These changes are passed on to the whole agricultural industry chain, which have an impact on the supply relation and supply mode. A high-efficient supply chain team should make timely adjustment to the supply strategy to target specific needs, as changes will cause gaps between supply and demand. Suppliers stand on one side, consumers stand on the other side. Non-standard producers will be eventually phased out. Chaudhari suggested that enterprises need to take care of partners of cooperation, as it is important to have a long-term cooperation.
Companies from different terminal markets wish to cooperate with Chinese enterprises
The most eye-catching topic of the workshop was no doubt the “Focus on the changes of terminal Markets”, where international companies from Brazil, the Caribbean area and Southeast Asia gave presentations on detailed market data to Chinese enterprises with respect to crop structure and pesticide applications in the terminal market. The presentations served to be an inspiration for Chinese enterprises over how to access the market with better ideas. Also through presentations, international companies passed information on the nature and special features of their own companies. More importantly, these international companies conveyed messages to Chinese enterprises to express their wish to cooperate with Chinese enterprises in joint development of the regional market.
Brazil is the most attractive market in South America, not only because of its large market volume but also due to its growth potential and acceptability of novel products. Luciano Galera, head of marketing and R&D of Ourofino
, used a large volume of data to analyze the crop protection structure of Brazil covering major crops such as soybean, corn, sugarcane and cotton. He pointed that over recent years, the proportion of generic pesticides increased gradually. In 2017, the market share of the generic agrochemical market of Brazil exceeded that of patented products for the first time. In the years to come, a significant increase in fungicides is foreseen.
Over the last few years, there has been intense competition in the Brazilian agrochemical market. As opposed to most of the multinationals of the North Hemisphere, Ourofino is deeply rooted in the Brazilian local market, with good knowledge of local climate and environment; therefore, the company has the prior advantage of innovation in product and formula development. Recently, there has been a sharp price rise in China’s export of pesticide technology to Brazil. For this reason, Luciano disclosed that Ourofino has started trying local production. His company has been constantly making explorations of new formula development and sales are expected to reach $700 million in the near future. The information from Ourofino is a challenging and implicational message to Chinese companies present at the workshop.
The Caribbean Area, which has quite a complicated territorial environment, is not fully present in the market, but it encompasses a lot of agriculturally flourished small countries. Therefore, the region is actually not a small market. It is also for this reason that early market access and deployment in the region will be particularly important. Joe Pires, managing director of Caribbean Chemicals and Agencies of Trinidad and Tobago
, spoke about the challenges and opportunities of accessing the Caribbean agrochemical market. Joe presented detailed agricultural data of Dominica, Panama, Costa Rica, Nicaragua, Honduras and Salvatore, having pointed out the unique features of local agriculture.
According to the information provided by Pires, Caribbean Chemicals and Agencies procures a large amount of pesticide technology from China, and its export business covers 22 countries of the region. Joe holds the view that there will be great opportunities in the Caribbean market in the seven to ten years ahead when Chinese companies are expected to play a very important role. However, due to the diversity of territory, language and registration requirement of the local region, it is critical for Chinese companies to select right partners for cooperation. Joe believed that his company would be happy to cooperate with Chinese companies in the joint development of this market.
Europe is a mature and well-regulated agrochemical market, which is also a forbidding market in the eyes of many Chinese pesticide suppliers. At the workshop, AgroPages invited a younger marketing-oriented company, Certis Europe, to give a presentation. Jean-Guillaume Delpierr, the business development manager of the company,
briefed their experience in the introduction of a new product of a Japanese company into Europe. The sales of Certis Europe, where 74.1 percent of stakes is held by Mitsui & Co., grew eight times just in a short period of 15 years since it was founded, bearing in mind that in the same period, the whole European market has experienced only one-fold growth. Certis Europe is now a top 10 crop protection company in Europe.
According to the information from Jean-Guillaume, presently 40 percent of the innovative products are from Japanese companies. He believes that in the future Chinese companies would have some research achievements to their name. Supported by Certis Europe’s well-established marketing and business network in Europe, Jean-Guillaume says that his company is ready to introduce more innovative products from China in the coming three years, as well as develop formulations adapted to European climate conditions. Certis Europe is prepared to make a joint exploration of the European market in cooperation with Chinese enterprises.
C S Liew, general manager of Pacific Agriscience
, has 40 years of experience in the agrochemical business. At present, the company is focusing on merger and acquisition consultancy services, having undertaken consultancies for a number of international agrochemical merger and acquisition projects. At the workshop, Liew looked at expediting cooperation between Chinese and Indian agrochemical enterprises. He pointed out that a trade imbalance exists between India and China. In the 2016 – 2017 fiscal year, India’s trade deficit was $51 billion, which should not always stay that way; it is not acceptable to the country. On the one hand, Chinese agrochemical enterprises are supposed to invest in India, which would improve the balance of trade. On the other hand, Indian market is still growing continuously. Moreover, the existence of the second production base in India of Chinese enterprises will contribute to risk management, particularly under China’s present environmental regulation circumstance when lots of factories are confronted with the situation of shutdown or reduction of production. India’s promotion of the “Make in India” movement will also bring benefit to Chinese investors. However, expansion of cooperation between the two countries requires the elimination of cultural obstacles and an increase in mutual trust.
GLP Lab and registration consultancy – an indispensable part of pesticide value chain
CRO and CRAO play a very important role in the process of chemicals registration. CRO and CRAO can provide pesticide enterprises with a one-stop service covering prior period investigation, project appraisal, documentation examination and trading registration, aiming to solve tough problems for enterprises and enhance efficiency and competitiveness. In this regard, a professional lab service and registration consultancy will act as an external brain and facilitator in support of the market development of enterprises.
At the workshop, Doctor Chen Tingting of Dr. Knoell Consult, gave a presentation on the procedure of registration of active ingredients in Europe. Dr. Chen explained in details the new process of registration of active ingredients and candidate substances. She also elaborated on the definition of the pesticide basic substance, as stipulated in the latest pesticide regulations of the EU.
Adrian Tucker, Chief Scientist of Exponent China, delivered a report entitled, “Pesticide Export to Europe: How to Obtain Permit?” Adrian gave a detailed introduction of the registration procedure and their practical experiences in accessing the European pesticide market. His introduction won him praise from the entire audience.
Jana Skopec, President of AgriFor Scientific, spoke about the global crop protection industry. Jana said that over recent years the agrochemical market of Southeast Asia, Africa and Australia has been growing rapidly. Selection of an excellent laboratory service can effectively help clients to reduce cost and increase efficiency so as to achieve optimized business results. The AgriFor team led by her has provided agrochemical enterprises with satisfactory service with her rigorous scientific attitude, which has been well recognized by Chinese pesticide enterprises.
Dr. Khosro Khodayari of Syntech reviewed the agricultural research activities over the last 15 years and also touched upon future business prospects of the industry. He said that the number of research firms had dropped with merger and acquisition activities over the last 15 years. In the meantime, production and trading of agrochemicals had increased step by step. Legal regulations had become much stricter, costs of product research and registration had increased gradually. As a result, large enterprises have been positioned to research prime products in the market. Khosro also addressed the importance of CRO, which has built a good relationship between enterprises and government agencies. In the 15 years ahead, agrochemicals or seed enterprises are expected to cooperate increasingly with CRO and will select CRO of good conduct for collaboration. CRO, which can provide all-round services with worldwide presence, would have increased business opportunities.
Ms. Zhu Min, the chief representative of Bioagri China, listed the following points for the export business of the company. The first is to analyse whether the product involve various types of patents, and whether it meets the requirements of the current mainstream market when doing research and development. Second, in the domestic registration process, attention must be paid to the registration requirements and registration costs under the new pesticide registration regulations, as well as the determination of the concentration of pesticide technical registration and the gradient concentration of the formulation registration. In the export registration process, attention should be paid to the consistency of overseas and domestic registration concentration, indicator control of GDP data reporting, GLP chemical classification and labeling system, and refinement requirements for product label specifications in overseas registration operations. Zhu Min also said that Bioagri is not only a GLP organization, but also acts as a trend observer and information aggregator to help companies control risks in the process of entering the market.
Making full exchanges to seek possible cooperation
Besides the presentation session, in order to promote practical exchanges between international and Chinese companies, AgroPages arranged a Business Exchange Meeting during the workshop. At the meeting, the business scope and demands were presented by representatives of all participated international companies, including ANASAC of Chile, Lions Group of Ethiopia, SAFA TARIM of Turkey, Myanma AWBA of Myanmar, Ecotech of Vietnam, Jebagro of Germany, Asiatic Agriculture Industries of Singapore, etc.
Chinese leading suppliers, such as Red Sun, Veyong Biochemical, Luba Chemical, Zhongshan Chemical, Limin Chemical and Suli Chemical are all excellent suppliers to China, as screened out by AgroPages. These leading suppliers had intensified exchanges and communications with international counterparts in more depth at the workshop.
AgroPages learned from the discussions at the workshop that quite a lot of these international companies have realized the great changes that are taking place in the Chinese pesticide industry. In the new era of Chinese pesticide development, these international companies are hoping to be connected to large Chinese enterprises in legal compliance to engage in business collaboration or consolidate existing cooperation.
The workshop was highly regarded by participants, due to which, AgroPages felt the importance of an efficient and practical information exchange platform for the industry. During the meeting, a large number of overseas audiences already signed up to participate in the workshop next year. The distinguished guest, Nick Read of HELM, who flew to Hangzhou from Germany, spoke in praise of the workshop. He thought it was a good opportunity to share the values of its company and exchange views with existing and future partners of cooperation.
The other guest, Jean-Guillaume Delpierr of Certis Europe, deemed the event very helpful and fruitful, as people could meet old friends here and would get to make new friends. He said that his focus of work later would be on the introduction of Chinese innovative products into the EU market and he would, therefore, participate in the workshop next year. To this end, he was prepared to continue his provision of information in the EU market at the workshop next year.
Li Yi, the China Representative of Hermoo Belgium, said that the workshop comprised discussion and free talk, which was a good form of meeting. Hermoo was prepared to make further business deployment in China and would get closer to the workshop and may deliver a keynote speech next time.
Before the conclusion of the workshop, preparations for the next workshop had already begun. Those wishing to join the 2019CPEW, whether through sponsorship, delivery of a keynote speech or expression of any idea, were welcome to contact AgroPage. We will make the most of the platform to help you to convey your values and business demands so as to establish an effective business connectivity with Chinese enterprises.