At the 22nd AgoChemEx in Hangzhou, China, Lu Wenhui, Deputy General Manager of Fuhua Tongda, one of the biggest glyphosate producer globally, shared the recent export dynamics of the company as well as Fuhua Tongda’s future development of circular economy in an interview with the media.
Q: Fuhua Chemical is an export-oriented enterprise, ranking 4th on China’s 2021 pesticide exporter list. In today’s anti-globalization wave, while facing the unfavorable export situation, is Fuhua Chemical much affected? How are you prepared to deal with the situation?
A: No big impact is foreseen, mainly for several reasons: The first, glyphosate is the world’s largest herbicide variety, for which the demand is in general big; the second, glyphosate is correlated to the GM crop planting area, which is currently relatively stable; moreover, China is the only source of glyphosate supply besides Bayer, and from this perspective, substitution for glyphosate by supply from other countries is quite limited. In this context, the overall demand will remain relatively stable. In addition, in light of the market situation at the present time, we have been improving our product quality and service to reinforce cooperation with customers, which ensures the stability of exportation and enhances customer stickiness.
Q: We know Mr. Lu has been working on export trade for long years, Please share with us your valuable experience in the export trade.
A: In export trade, over the years, we have developed the market in several manners: 1) Exhibitions and overseas trade shows, which provide us with platforms to explore the international market; 2) Use of industry journals and media advertisements at home and abroad, participation in domestic and overseas business forums, there to meet different customers. Through these promotion activities, we could open up our market. Regarding customer management, we take various measures such as stable product quality, efficient service and stable delivery to maintain and stabilize the relationship with customers.
Q: Currently, Chinese pesticide exportation is facing the risk of exchange rate and the longer payment term. How do you avoid the risk?
A: Concerning the exchange rate, it is true that in the past two years, especially last year, the export exchange and the US dollar to RMB exchange rate have fluctuated quite a lot. We lock up foreign exchange and increase the proportion of contract in cash sales as much as possible. Regarding the risk of longer-term of payment, we undertake to cover the risk through China Export Credit Insurance. For customers that the credit line of this insurance cannot cover, we insist on cash payment or other possible means to try to avoid the risk.
Q: Glyphosate is an important variety of Fuhua Chemical. The raw material cost rise squeezes the profit margin of the product. How would Fuhua respond?
A: In the past 20 years, Fuhua Chemical always adheres to one idea – sticking to the development of a circular economy-based industry chain. We have constantly been perfecting the whole upstream and downstream industrial chain of glyphosate. From the perspective of minerals, we own phosphate ore and salt mines, which are the basic raw materials necessary for glyphosate production. This year, we are moving forward from phosphate ore to the downstream yellow phosphorus, which, upon completion, will bring us through the whole industrial chain. In the future, our dependence on external supply of raw materials will be much reduced and production on our own will improve greatly, which is of great help to making stable supply to customers.
Q: Is Fuhua Chemical’s future business planning based on phosphorus?
A: Our development concept is based on the development of the green circular economy, as backed up by our mineral resources, which are intended to be fully utilized through the recycled operation.