After years of marketing progress in China, will 2021 be the best era for biostimulants?

During the Golden Week Holiday in October 2020, Valagro was acquired by the Syngenta Group while Agrinos acquired by AMVAC. This breaking news brought the biostimulant industry into a new era, making the whole industry think about what is behind the biological business deployment of multinationals.

In view of the two acquisitions, the latest biostimulant business development and the present industry where good and bad players have been running their businesses, the writer of this article immediately visited the cities of Qingdao, Rizhao and Jinan in Shandong Province to interview the following: 

-Chen Naiqi, General Manager of Biolchim China, Italy.

-Ji Keqing, Board Chairman of Qingdao Agro-Unitek Cropscience Co., Ltd.

-Li Guomin, President of Qingdao Haijingling Ocean Technology Co., Ltd.

-Yan Xinji, General Manager of Qingdao Almagro Co., Ltd. (right)

-Lin Chenbin, President of Shandong Jiejing Group Corp.

-Wu Zhenbin, Sales Director of Shandong Chuangxin Humic Acid Technology Co., Ltd.

-Li Xuelong, Dep General Manager of Jinan Zhongke Green Biotechnology Co., Ltd.

Each of the interviewed enterprises has its own business characteristics, not only in terms of brand building, marketing philosophy and product features, but also with respect to  business concepts that involves their respective perspectives. For example, some utilize advanced concepts introduced from Europe, some evolved from being a traditional pesticide business model, some are in possession of quality mineral resources, and some concentrate on manufacturing. 

Biostimulant Industry Trending 

In recent years, multinationals have conducted ongoing acquisitions. Senior industry experts stated that such types of acquisitions may not be good for business operations, as the acquired enterprises become just small branches of multinationals, which will inevitably affect their future operations.

Chen Naiqi holds the view that acquisitions should be viewed from multiple perspectives, stating, “It is indeed good for the industry, as it enables the whole industry to remember the word ‘biostimulant.’ Acquisitions have aroused the industry to think deeply about why multinational companies would make such a business decision.”

Valagro and Biolchim entered the Chinese market one after the other and are often associated together within the industry. They grew together in China with a well-established connection, being committed to the joint development of biostimulants. The first three years of Biolchim’s operations in China was a period when this type of product was promoted for popularization through media and business seminars, but Biolchim was never mentioned. However, at the final stage of promotion, biostimulants were always associated with the name, Biolchim. Presently, it is during the stage of application when the product is described as “a pesticide that reduces loss, a fertilizer that ensures yield and a biostimulant that improves quality.” 

As a representative of one of the first humic acid manufacturers in China, Wu Zhenbin said, “Seven to eight years ago, only two or three companies participating in a fertilizer fair were producing humic acid, but a few days ago, almost every company participating in the Shandong Plant Protection Fair presented humic acid. Now there are 100 to 200 humic acid manufacturers in China.” He added that in the past, when he was promoting humic acid, nobody knew about it and farmers all wanted to have that “black fertilizer”. Today, when he was going out to promote the company’s products, other sellers told him, “The market was opened by you, we just quote a lower price to get the business,” Hearing this, Wu became very angry.

Even if the industry continues to grow, biostimulant will still play a synergist role, which is just a small part of agricultural production. As far as farmers are concerned, they will likely only spend on biostimulants if they are profitable during the year, so it cannot be applied on a large scale. By contrast the use of biostimulants is legally required in Japan. If planting takes away nutrients from the soil, it has to be returned to the soil to give back nutrients to the environment. This may vary in China. For example, there are similar regulations in Xinjiang, where land reclamation is not easy.

Li Guomin noted that in China and neighboring countries, such as India and Pakistan, are streamlining their policies. There was no definite classification, but now the Chinese Ministry of Agriculture and Rural Affairs has issued relevant guidelines. Hence, the number of applications will surely increase.

Even though he was angered, Wu decided that 2021 will be a good year for the industry. The promising factor is that China’s 13th-Five Year Plan will enable fund distribution and soil allocation, while people’s awareness is also growing. According to Li Guomin, biostimulant has always been a hot product, but there is no perception, awareness and influence. In addition, the branding is not built up, which is not comparable to large pesticide or fertilizer manufacturers. As a result, it is downplayed by the traditional agrochemical industry. 

“City Moat” – Raw Material Resource and Technology

Although the biostimulant industry still has a low-level of competition, the market is huge, too big to even consider competitors. However, players that have entered the market have experienced competition in the pesticide and fertilizer market. Therefore, these players know how to compete against others and protect themselves via “city moat” tactics. Unanimously, core competitiveness is based on two factors, which are raw material resource and technology.

Biolchim was founded in Italy in 1972, having deployed its business in more than 80 countries. In the course of business development, the company has consolidated its global resources and controls core raw materials used to make biostimulants, which are seaweed, humic acid and amino acid. Chen Naiqi said that organics could mean instability, as they can be unstable, unlike inorganics which are stable. Organic products must be stable as commercial products, so raw materials need to be better manipulated and managed to ensure the quality of all batches of products. 

Similarly, the two “seaweed players,” Qingdao Haijingling and the Shandong Jiejing Group, have developed businesses backed by high quality seaweed. What makes them different is that of offering the well-known gulfweed, Haijingling and Jiejing use imported ascophyllum, which is a type of brown seaweed that has a richer nutrient content.

Lin Chenbin highlighted the importance of raw materials and quality. Since everyone has access to alginic acid and seaweed, competition has become a matter of quality. The Jiejing Group is dedicated to the development of a unique alga polyphenol. 

Humic product, which is exclusively distributed by Qingdao Agro-Unitek Cropscience Co., Ltd., originates from a high-quality mineral resource and is expected to achieve sales of over Yuan100 million. 

Dr. Mir M. Seyedbagheri, R&D Director of US Humic Growth Solutions, delivered a keynote speech at BIOEX 2019, organized by AgroPages. Dr. Seyedbagheri is an honorary professor of the University of Idaho, US, who chose Humic because of its convenient research environment and high-quality mineral resources.

The mineral resource of Shandong Chuangxin Humic Acid Technology Co., Ltd. is located in the Gobi Desert with 25,000 tons of mineral materials and high-quality mineral reserves reaching 17 million tons. Wu Zhenbin noted the fact that humic acid-subordinated enterprises that are located in Xinjiang and Shanxi Juduo, but some business leaders are currently discovering mineral resources in Outer Mongolia and Pakistan. 

Quality relies on stability, which in turn relies on technology and formulation. The plant nutrient protective agent of Korean C&L, distributed by Almagro, is produced using the dry suspension technique for pesticides, which reduces particle size to 9.5 micron, enhancing full foliar contact. 

Haijingling Group’s low temperature enzymolysis technique can maintain the maximum nutrient content of raw materials. Jiejing Group has conducted many experiments on mixing elements with alga polyphenol, with the results being shared with others with reference to researching the stability, existence or absence of deposits and chelating sequence. There are many other factors that can be elaborated. 

Exploration and inspiration from companies with different merits 

Different enterprises have their unique merits. These companies are pioneers in terms of researching corporate branding, visions and business concepts in China. They are the leaders of the market, providing education and guidance for market development, enabling late-comers to the market to learn and advance their businesses to achieve healthy market development.

Biolchim's global merit and the integrity of the industrial chain have cultivated its business philosophy, focusing on problem-solving and functional solutions rather than a product-oriented business philosophy. Chen Naiqi stressed, “The physiological needs of plants and humans are the same in many ways, it is definitely appropriate for plants to be likened to women. Plants need to experience the process of flowering and fruiting, just like the process of women's pregnancy and childbirth. During different physiological stages, their growth hormone level and nutritional requirements are different, therefore, biological stimulants, nutrients and minerals are used for the purpose of comprehensive nurturing and supplementation.”

As an exclusive agent of overseas products, Yan Xinji said that Almagro adopted an operating agency model as opposed to a traditional agency model while adhering to the business philosophy of providing world class products at Chinese prices. The company can reduce unnecessary costs when importing from Omnia, Australia, to directly offer products to farmers at lower prices, through reducing the gross profits of dealers, ensuring that customers will receive world-class products that are high quality but reasonably priced, creating a quality-price double advantage. “Who does not want a product with a high price-performance ratio? Helping farmers to earn money is our goal,” Yan Xinji said.

Shandong Chuangxin Humic Acid Technology Co., Ltd., which is engaged in supplying raw materials, believes that large enterprises attach importance to stable business while small enterprises are competing at cost by purchasing raw materials at competitive prices. Therefore, Shandong Chuangxin Humic Acid Technology is targeting only medium and high-end customers.

Li Guomin from the Haijingling Group is a low-profile person who does not publicity promote its products by promoting them in the local media. The company is regarded by the industry as being aloof and proud, even being described as almost inhuman. Li holds the opinion that one needs to do its own job well. It is noted that one of the company’s distributors in Hainan Province has cooperated with Haijingling for eight years, where sales have increased from the Yuan100,000 to the current figure of over Yuan1 million.

Two leading pesticide enterprises, Qingdao Agro-Unitek Cropscience Co., Ltd. and Jinan Zhongke Green Biotechnology Co., Ltd., have exerted considerable efforts and made breakthroughs in terms of business transformation. The world is limited and competition is fierce. All financially strong companies will eventually find it harder to continue their business growth, and returns are getting lower. Li Xuelong, Dep. General Manager of Jinan Zhongke Green Biotechnology, said that the company began producing chemical pesticide formulations in 1998, but its profits have declined slowly in an undetectable manner in spite of growth in sales. Therefore, the company is making the transition to the biological sector, where profit margins are higher and the market is more promising.

Coincidentally, the working team of Jinan Zhongke Green Biotechnology developed the product, Aerida, using the pesticide formulation technique of the company. The product is a combination of microbial bacillus subtilis, amino acid immune protein and the biological pesticide, ningnanmycin. With the support of its strong customer portfolio, trials were conducted for application on ginger, corn and potato, in accordance with Li Xuelong's masculine engineering working style, “biological product takes time to explore, which will be very long; for one single crop it will take one year.”

The interview ended with a statement from Qingdao Agro-Unitek Cropscience Co., Ltd:

The market for improving the quality of crops is infinite. The new market is growing not only in an orderly manner, but competitors are also not obvious and the market may change significantly in the future. The industry sector may change dramatically due to the later entry of enterprises that are currently not prepared and have not invested in the sector, while new players have already stepped in. For example, large pesticide enterprises are making the transition to the biological sector, and non-agricultural enterprises are acquiring agricultural resources.

Competition is presently not fierce enough yet, so will leading products and companies still stay at the top as in the past?

With the further growth of the biostimulant market in China, packaging and marketing strategies are also an important to market access. If you want your superior biostimulant products to gain access into the Chinese market, you are welcome to contact AgroPages.

Contact:

Lu Yutian

Email: yutian.lu@agropages.com