Zhejiang Zhongshan Chemical Industry Group Co. Ltd.
(Zhongshan Chemical), an established pesticide maker, has evolved into an industry leader with a diverse product portfolio and well-regarded products and services, after weathering the storm in the global pesticide arena. In the last two years, Zhongshan Chemical has been steadily moving forward along its established strategic path, at a time when its Chinese rivals are trying to seize opportunities for transformation.
In the mind of Li Dan, the director of the company, Zhongshan Chemical prides itself for its strength: massive production, advanced manufacturing technology, and a good reputation for product quality—which also represents what the company has been focusing on, as always. In 2018, Zhongshan Chemical expanded the production of its competitive products, including triazine herbicides, mesotrione, and metamitron, continuing its momentum to lead the market. In addition, it targeted a wide range of high-end agrochemical technicals—such as penoxsulam, pyraclostrobin, pinoxaden, and prothioconazole—and established full preparations for the project start-up.
We may wonder why Zhongshan Chemical, amid mounting environmental regulations, has still managed to significantly increase its capacity and is poised to expand with a number of new, premium products. And what is the company’s development strategy for the future? In a recent exclusive interview with AGROPAGES, Li Dan shared with us what Zhongshan Chemical thrives on and where it is heading.
A leading triazine herbicides producer
Founded in 1998 as a maker of corn field herbicides, Zhongshan Chemical stays committed to its business philosophy “to be a good source of green pesticides”, trying to provide its global customers and partners with superior, efficient products. Today, Zhongshan Chemical operates a world-leading production capacity of triazine herbicides, with its product portfolio covering herbicides, insecticides, and fungicides. Most notably, the company's triazine products, including atrazine and ametryn, have for many consecutive years, ranked first domestically and second globally among industry players, in terms of product capacity, sales volume, among others.
Zhongshan Chemical sees innovative R&D as its lifeblood and so far has poured over 50 million USD into its R&D effort, Li Dan noted. Riding on its more than 50 patents with proprietary intellectual property rights amassed over the past decade, the company is outpacing its domestic peers in the R&D of high-end products and has narrowed the gap with global leaders in the sector.
Zhongshan Chemical can produce annually over 100,000 tons of pesticide technical and formulations from its three plants with different focuses, located in the Chinese provinces of Zhejiang, Anhui, and Jiangsu. Their products include triazine herbicides, mesotrione, metamitron, bentazone, as well as new products soon to be brought on stream upon approval, such as penoxsulam, isoxaflutole, pyraclostrobin, prothioconazole, and trifloxystrobin.
Zhongshan Chemical enjoys an extensive market presence globally, with its products reaching Canada, the United States, Mexico, Brazil, Argentina, Russia, Australia, and others. At present, the Group derives over 70% of its sales revenue from foreign trade. In 2017, Zhongshan Chemical ranked 16th among the Top 100 Pesticide Exporters of China, with its export volume hitting 132 million USD. The company’s direct and indirect export volume in 2018 is forecast to be in excess of 200 million USD.
Building excellence in both product & service to support partners
Advanced production systems
By virtue of its stable product quality and sophisticated market service, Zhongshan Chemical has not only forged solid partnerships with multinational giants such as BASF, Monsanto and ADAMA, but has won a good reputation among importers from around the world. Through partnerships with these multinational powerhouses, Zhongshan Chemical has established the production technology systems and product quality that meet internationally advanced standards, and has enhanced its service ability, while addressing diversified demands in different regional markets across the globe.
Li Dan said that as a major supplier of mesotrione for big multinationals, Zhongshan Chemical complies with a host of stringent technical requirements. In addition, through ongoing innovations, Zhongshan Chemical has developed a number of technologies with proprietary intellectual property rights and core competitiveness. “Such instances are not rare,” Li Dan added.
A robust procurement team
To ensure product supply and price stability, Zhongshan Chemical has assembled a professional pesticide procurement team responding fast to supply and demand dynamics in the market. The procurement team, long exposed to the supply and raw material markets, keeps suppliers with longstanding partnerships on the radar. Meanwhile, the team enjoys strong financial support and fine inventory management. This means the team can offer customers a wide variety of products with stable sources and competitive prices.
A professional global registration team
In addition to trade cooperation, Zhongshan Chemical works actively to develop overseas markets. It has set up branches in a number of agriculturally developed markets including Brazil, the United States, Argentina, Bolivia, Indonesia, and Canada, where it conducts independent or collaborative registration. Currently, Zhongshan Chemical has a worldwide registration team of 40-plus professional registration personnel familiar with the latest laws and regulations locally and globally, supporting 500+ registered products and meeting the diverse needs of global customers. Most recently, the EU arm of the registration team obtained the 11th determination of pesticide technical equivalence in EU, opening the door for massive sales in the EU market.
Flexible and Intelligent Formulation Plants
Relying on its powerful development strength, Zhongshan Chemical can also satisfy the requirements of customers for different formulated products with its automatic and semi-automatic formulation lines. “We keep an intensive investment in formulation technology and registrations." Li Dan explained, “We have now 126 ICAMA formulation registrations and over 200 more in our pipeline to be registered in the next few years.” Furthermore, in close cooperation with Huntsman, Zhongshan has developed personalized formulas with Huntsman’s adjuvants covering most of the formulation types which guarantee the outstanding quality of Zhongshan’s formulation products.
Integrating technical pesticide and formulations, Zhongshan Chemical has now emerged as a one-stop supply chain provider for plenty of buyers. “By servicing and dealing with our buyers over these years, we have made friends with many of them. At Zhongshan Chemical, business personnel are not merely marketing products—but instead, they are serving the market with their professionalism. Some buyers turn to us for recommendations even for products not available with us—a testimony to their full trust in our judgment,” Li Dan told us.
A number of competitive and high-end products soon to be put into production
In the last two years, the “environmental protection storms” have impacted greatly China's chemical industry, leading to the shutdown of many pesticide technical producers and sharply contracting the capacity. During this tough time, Zhongshan Chemical has expanded the capacity of many of its leading products with a low profile and has targeted a wide range of new high-end products, as it marches steadily forward following its established strategic path. Going forward, the new capacity will effectively ensure the pesticide technical supply of Zhongshan Chemical, supporting the marketing and development of its partners in China and beyond. Besides, the additional capacity will give Zhongshan Chemical an early advantage in the market.
Zhongshan Chemical’s capacity expansion and new product projects are both situated at its plant at Xiangshui Ecological Chemical Park in Jiangsu Province. To date, the company has expanded the capacity of triazines (including atrazine, ametryn, simazine, and terbuthylazine) from 70,000 tons to 100,000 tons, expanded the capacity of mesotriones from 1,500 tons to 4,500 tons (an additional 3000 tons are waiting for production approval and will lift the total capacity to 7,500 tons once completed), expanded the capacity of metamitrons from 800 tons to 3,800 tons, and expanded the capacity of bentazone from 2,400 tons to 8,400 tons, Li Dan revealed.
With regard to extending the industrial chain, Li Dan said that “in the past two years, we spent a lot on the raw materials of upstream intermediates. We have matched the intermediates of virtually every variety, to ensure stable production and competitive prices”. This will also provide the company with a more robust momentum and enhance its capacity to withstand risk.
In addition to the capacity expansion project, Zhongshan Chemical has targeted a few upscale markets, for which it is making preparations for production. At present, the company has gained approval from environmental authorities for the production of penoxsulam, isoxaflutole, pyraclostrobin, prothioconazole, trifloxystrobin, among others, and will start massive production soon.
“This expansion drive is aimed at strengthening supply for our existing partners. Meanwhile, we need new growth points and the market gap needs to be filled. In this process, we will strive to become the best strategic partners of our customers and planters across the world by delivering more, better, and competitively priced new products to them,” said Li Dan.
Continue to focus on production strength and have a say in the market
In the exchange, Li Dan also shared with us some of his viewpoints on the environment the agrochemical industry faces, internationally and domestically. As he sees it, the global heft of the Chinese pesticide industry is incommensurate with its actual influence out there. China, a producer of more than 70% of globe's pesticides, ekes out only a meager profit. Nowadays, many global end users have little idea—and even deep misunderstandings and fears—over Chinese pesticide players and what they offer.
“Indeed, Chinese pesticide markers, including us, have been keeping a low profile, dedicated to delivering good products, and this is part of why we are currently not so global,” Li Dan said, “But in fact, the global influence of Chinese pesticide firms is expanding in these years. In the long run, we believe that a mega change will take place in the pesticide market landscape, with links from production to distribution and the customer base is expected to undergo one or more reshuffles across the globe.”
Speaking of Zhongshan Chemical’s mid-to-long-term development strategy, Li Dan said that the company would remain focused on manufacturing, continuing to expand the capacity of its portfolio of technical material products and formulations. In the next few years, Zhongshan Chemical will put into production a growing number of new technical materials, while raising the capacity of formulations up to 135,000 tons, thus providing downstream enterprises with a stable supply of quality products, Li Dan said. “We are investing more in R&D in response to the fast-changing market dynamics. Meanwhile, we are working toward product registration and the introduction of new products across markets, in a bid to provide our partners with more product portfolios while trying different cooperative models. We also have plans to ramp up acquisitions on the upstream of the industry. We share the same ultimate goal—to best leverage our combined strength to jointly expand our market shares.”
With the development of technology and the market, especially given that the bottleneck of product creation is looming large, Chinese pesticide companies will evolve in two directions. One direction is that products will be increasingly concentrated, with a handful of players accounting for over 70% of a product’s output and gradually gaining pricing power. The other is that companies will keep expanding their reach over the market, eventually holding a certain share across end markets. “Both directions are right and supportive for success. However, whether this objective is attainable depends largely on how different players position themselves and what they do to improve their operation and management. As for Zhongshan Chemical, we prefer to follow the first direction—making our dominant products more dominant and growing with our partners all along the way,” Li Dan concluded.
This article was published in AgroPages' 2019 China Pesticide Suppliers Guide magazine. Click the image to download the magazine.