To consolidate competitive edge to enable Chinese pesticide industry to change from the “left over” status to a “win over” position

The Chinese economy has experienced new challenges at the beginning of the country's 13th five-year plan, such as the decline in economic growth and problems with industrial commodity prices, the profitability of the real economy, and fiscal revenue, observers have said. Economic risk is rising, and this has had an adverse impact on the petroleum and chemical industry. The pesticide business sector has not escaped this backlash. 

At the 10th China International Forum on Development of the Pesticide Industry, hosted by the CCPIT Sub-council of the Chemical Industry, Zhao Jungui, the vice chairman of China Petroleum and Chemical Industry Federation, delivered the 2015 China Petrochemical Industry Operation Status Report.

Zhao Jungui, the vice chairman of China Petroleum and Chemical Industry Federation

The report pointed out that the main problem faced by the Chinese petrochemical industry, inclusive of the pesticide sector, was the serious imbalance between demand and supply. The existing marginal demand had fallen progressively, and the oversupply problem could not be solved solely through the stimulation of domestic demand. Instead, the report suggested improvements to supply metrics should be the primary objective of the industry going forward. The goal is to achieve a balance between supply and demand, thus eliminating excess capacity, reducing stocks, deleveraging, cutting costs, and mitigating weakness.

Key indicators of petroleum and chemical industry performance in China 2015(￥million, $million, %)

Pesiticide production in 2015(tons, %)

Total value of foreign trade in 2015 ($ million, %)

After elaborating on the challenges facing the pesticide industry, Vice Chairman Zhao offered constructive ideas for the future development of the industry, suggesting the government, industry players, and industry associations should synergize development efforts, fully utilizing the institutionally advantageous and dynamic market-oriented mechanism.

- From the government's perspective

The government aims to strengthen top-level industry planning and policy support, make use of the functions of industry alliance to promote downstream industry cooperation, and to regulate the market and respect IPR  protection. Difficulty in adjusting the structure of the industry exposes a weak capacity for innovation. This is why the Chinese pesticide industry has avoided addressing the issue of enhancing its innovation capabilities. A national non-profit pesticide innovation center will be established by the government to resolve key technical issues, upgrade the strength of the industry, and boost industrialization.

- From the industry's perspective

The industry hopes to change the traditional business model and the confused mindset that only focuses on rapid growth. Before growing bigger and stronger, businesses should attach importance to the quality of this growth. They should also change the mindset of imitating others and be courageous in innovation. In consolidating the company’s competitive edge, it should create value and drive sustainable development at a higher level.

Under the new normal status and new situations arising in the industry, new challenges and opportunities will also arise. The Chinese pesticide industry should seize these opportunities and be well prepared for a new round of industry restructuring to achieve a major transformation.