In the face of the Covid-19 pandemic, China’s export-oriented agrochemical manufacturers were forced to step out of their comfort zone, by readjusting their product lines, supply chains, management processes, customer services and risk control measures.
"The data I just received from the finance department shows that our export turnover in the first quarter of this year increased by roughly 20%, except for pesticide technicals," said Niu Yuling, head of the Foreign Trade Department of Hailir Pesticides and Chemicals Group
At present, the company's export products, including insecticides, fungicides, herbicides and fertilizers, are mostly sold to over 60 countries and regions in the Middle East, Africa, Southeast Asia, Central America and South America.
Exports account for about 35% of Hailir's total sales. Niu added that the domestic pesticide market has become competitive due to saturation, while there is still some room for growth in the international market, therefore, the company's strategic direction was adjusted to increase exports, which is expected to grow further in the future.
While the pandemic is spreading around the world, there is still stable demand for pesticides and fertilizers for use during the spring ploughing. Hailir embraced the seasonal rise in incoming purchase orders at the start of the year, which was, however, challenged since late March when international logistics was affected by the pandemic, though the number of overseas purchase orders remained stable or even slightly increased.
"Increasing freight costs and customer purchasing costs and unreliable shipping have all affected product deliveries to a certain extent," Niu added, noting that although there have been delays in the delivery of goods, there have been no disputes and no one has claimed a breach of contract. "Most customers understand the shipping failures resulting from the pandemic, and instead suggested to find solutions through joint efforts,” he explained.
In spite of the obstacles facing shipment, Hailir has not suffered a serious oversupply of stocks, because it is taking part in both domestic trade and foreign trade and selling many products, like "walking on two legs," therefore, complementing each other and enabling the sale of overstocks. Products for export being hindered can be shifted to domestic sales while products for domestic sales being hindered can be shifted for export providing that certification and accreditation are available, allowing for flexible sales arrangements.
The global spread of the pandemic has intensified many foreign trade uncertainties, but the stable and even rising number of purchase orders placed to Hailir gives it assurance and confidence. This is due to Hailir’s international marketing strategy, which enabled it to establish trade relationships with over 60 countries and regions worldwide, especially as a result of the Belt and Road Initiative. Hailir’s business growth in countries participating in the initiative has been maintained at around 30%. Meanwhile, Hailir has established offices in Brazil, Argentina, the Philippines and Myanmar.
The support from government departments at all levels has also assured Hailir of its future business development. Niu noted China’s export credit insurance policy, which has made national financing available for purchasing insurance reserves covering 80% to 90% of losses incurred by exporters due to commercial or political risks on the side of importers.
Niu said that in some regions hit hard by the pandemic, the company has increased its use of the instrument of export credit insurance. Excepting customers to usually pay in advance, the company has basically insured all purchase orders, and to date, it has received compensation for the delayed payments of few purchase orders.
"Of course, export credit insurance only plays a role in leverage, so we, as exporters, still need to enhance our risk control and customer management capabilities. We do not rely on this policy, but with the support of this policy, our business is more secure," he said in conclusion.