Increased Capacity of Chinese Pesticide Industry Reflected by Top 100 Enterprises

According to the 2012 sales statistics of China’s Top 100 Pesticide Producers kept by Agropages, China’s Top 100 Pesticide Enterprises achieved sales of Yuan 85.33 billion in 2012, accounting for roughly 36% of Yuan 236.34 billion, which is China’s total pesticide sales according to the statistics of the National Bureau of Statistics of China.

The minimum amount to arrive at China’s Top 100 Pesticide Enterprises 2012 is Yuan 250 million, being Yuan 50 million up over the Yuan 200 million in 2011, which is also a reflection of the increased capacity of Chinese pesticide producers. Among the top 100, there were 9 producers having achieved sales of over Yuan 2 billion; 20 producers achieved sales between Yuan 1 billion to 2 billion (inclusive of Yuan 1 billion); 33 producers achieved sales between Yuan 500 million to 1 billion; and 38 producers achieved sales between Yuan 200 million to 500 million. In 2011 Wynca was the only one with sales of over Yuan 2 billion and there were only 15 producers reaching Yuan 1 billion to 2 billion, which made the increased sales of Chinese pesticide producers in 2012 to be very apparent. In 2012 Besides Wynca, another 8 producers have achieved sales of over Yuan 2 billion, of which Huapont-Nutrichem made a breakthrough to reach Yuan 3 billion, not only absolutely ranking No.1 of the top 100 but also stepped into the World Top 20 Agrochemical Enterprises. Furthermore, the total amount of the 9 producers with sales over Yuan 2 billion reached Yuan 22.98 billion, accounting for 27% of the total of the top 100. The increased sales of the top 100 also reflected the gradually revived market and the positive result of the national policies to support prime agrochemical enterprises and the encouragement to the restructuring of industries.

As shown, 3 provinces continued to rank the the 1st , 2nd and 3rd places of the top 100. Jiangsu Province has got 31 top 100 enterprises reaching sales of Yuan 28.47 billion; Shandong Province has got 16 top 100 enterprises reaching sales of Yuan 14.83 billion and Zhejiang Province has got 15 top 100 enterprises reaching sales of Yuan 11.90 billion. Sichuan Province has got 5 top 100 enterprises reaching sales of Yuan 5.25 billion, ranking No.4 among of the top 100.




Increased M&A Bring More Opportunities to Chinese Agrochemical Enterprises

Great changes have taken place in China’s pesticide industry over the last 2 years. It is recognized within the industry that the increased environmental pressure and the accelerated mergers are the 2 important opportunities to pesticide producers. With the well-established national environment & safety regulations put in place, all enterprises are required to invest in the compliance program. On the other hand, the 12th-5-Year Plan of Pesticide Industry has put forward a strategy of “industry upgrade & cluster development” requiring more centralized pesticide technical productions to cultivate large scale group companies of international competitive advantage and professional pesticide producers of both R&D capacity and product planning capability so that they can grow stronger via the restructuring process. The frequent mergers over last several years show that China’s agrochemical enterprises, particularly those with special features, advantages or large scales, have not only realized the available opportunities but also have taken actions to seize the opportunities. It is foreseeable that there will be even more mergers within the industry, and it will not take too long to see the rise of large Chinese agrochemical companies with international competitive advantage.

There were no overseas mergers by Chinese agrochemical enterprises in 2013. There were mainly 3 types of restructuring activities: a) internal restructuring for the purpose of consolidation of advantageous resources, such as the establishment of Hebei Veyong Bio-Chemical & Pesticide in July 2013 who takes over the agrochemical business of Hebei Veyong Bio-Chemical, as well as the merger of 2 subsidiaries of Nanjing Red Sun; b) Merge with agrochemical enterprises for the purpose of expansion of agrochemical business, like Makhteshim Agan, via its Dutch company, offering to acquire B Share of Sanonda, which shows the intention of ChemChina Group to consolidate its pesticide business, also Sinochem’s control of Yangnong Chemical Group has played good foundations for its promotion of pesticide industrialization process; c) upstream-downstream merge for the purpose of extension of industry chains, like China’s No.1 company in sales volume, Huapont-Nutrichem acquiring fine chemical enterprises who produce pesticide upstream chemicals. After the acquisition, the product line of Huapont-Nutrichem is enhanced being able to provide partners with more product varieties. The acquisition of Renshou Yifeng Pesticide by Lier Chemical aims to speed up formulations business; as the No.1 Chinese pesticide producer, Noposion Agrochemical acquired Jiangsu Changlong Chemicals who is a large technical product enterprise, showing that formulation producers are moving toward upstream productions to form a complementation to its existing advantage.

Enhanced Investment & Expansion of Agrochemical Enterprises

In 2013, Chinese agrochemical enterprises were very active in investment and business expansions, focusing on launch of new projects. Hebang Co., Ltd, backed up by its PMIDA, invested Yuan 500 million in setting up an annually 50,000-ton glyphosate plant; the annually 1,000-ton epoxiconazole project of Jiangsu Huifeng Agrochemical Co., Ltd was brought on stream, which will further increase its fungicide market share; Zhengbang Group spent Yuan 1.02 billion on a pesticide technical plant and a water-based environment-friendly pesticide formulation project; the annually 500-tondiphenyl bacteria amine project and the 300-ton methoxyfenozide project of Lianhe Chemical Technology Co., Ltd were put into operation; a subsidiary of Shandong Qiaochang Chemical was prepared to launch an annually 550-ton imazamox series project; and the annually 2,000-ton dicamba project of Jiangsu Changqing Agrochemical was put into production.

As regards to new project, a good example is Jiangsu Lanfeng Biochemical, who announced an investment of Yuan 10 million on establishment of its subsidiary Lanfeng Import & Export Co., Ltd, followed by another decision to launch a joint venture in Italy in cooperation with Zhejiang Tide Group and Agroventures S.R.L.

It is worthy of note that there has been a good sign of research achievement made by Chinese agrochemical enterprises. Over recent years, the scale and market share of a number of Chinese agrochemical enterprises have been growing bigger and bigger, which however were mostly concentrating on primary product or OEM agency production for multinationals. New product development has always been a weakness of Chinese pesticide industry, no matter when talking about the industry research capacity or investment on innovation by individual agrochemical enterprises. Now there is a good start of research activities, typical example would be Sinochem Agro, who, with the strong support of its 2 research institutions - Shenyang Research Institute of Chemical Industry and Zhejiang Research Institute of Chemical Industry, has obtained registration of the diamide insecticide (code: SYP9080) which is of independent intellectual property. At present Sinochem Agro is speeding up its development of more diamide insecticides.

M&A of Chinese Agro Companies in 2013

·Hebei Veyong Bio-Chemical passed pesticide business to its subsidiary Hebei Veyong Bio-Chemical & Pesticide.
·Huapont-Nutrichem acquiring 2 fine chemical enterprises for the consolidation of upstream-downstream resources to enrich product line.
·Sinochem Group acquiring 0.06% stake of Jiangsu Yangnong Chemical Group thus totally holds 40.59% to become the controlling shareholder of Yangnong Group.
·Lier Chemical acquiring Renshou Yifeng Pesticide Co., Ltd to speed up its formulations business.
·Nanjing Red Sun merged its 2 subsidiaries in order to reduce cost and enhance competitiveness.
·Noposion Agrochemicals acquiring Jiangsu Changlong Chemicals to extend its industry chains.
·ChemChina’s wholly owned subsidiary Makhteshim Agan, via its holding Celsius Property B. V. offered to acquire B Share of Sanonda.

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