2023 CPEW successfully held | Shaping China’s resilient agrochemical industry chain to confront global supply chain challenges

On July 13 and 14, 2023, the 7th China Pesticide Exporting Workshop (2023 CPEW) was held in Hangzhou, attracting the presence of more than 500 Chinese and foreign delegates representing more than 230 enterprises from home and abroad, who gathered to discuss the development of the Chinese pesticide industry and how to reshape its new image in the international pesticide supply chain. Discussions also aimed to help agrochemical enterprises align their market positions and develop markets in a coordinated manner, in line with the new international structure, to mutually ensure food security and the sustainable development of global agriculture.

2023 CPEW was hosted by AgroPages and the Zhejiang Provincial Crop Protection Industry Association, with Qilu Pharmaceutical being the exclusive title sponsor of the event while SINO-AGRI, Huimeng Bio-Technology, UPL and Udragon being co-sponsors. At the same time, the event received support from Hubei Xingfa, Nantong CAC, Lier Chemical, Jiangsu Weunite, Hebi Quanfeng, TrustChem, Hebei Xingbai, REACH24, Lansheng Biology, Jiangsu Yongkai Chem, Ningbo YICHEM, Dalian JOIN KING, Zhejiang Runhe, Kingtai Chemical, Tephra Bioscience, Nongbo Biology, Hu’nan Haili and LYDODO.

The current year, 2023, is the first year when China reopened after three years of pandemic restrictions. Currently, the global economic landscape is being widely reshaped, while agrochemical enterprises and even the entire agrochemical industry are facing economic and environmental uncertainty, which pose new challenges to the Chinese pesticide supply chain. At 2023 CPEW, AgroPages specially invited 24 industry experts and industry icons to deliver keynote speeches and share insight into the global supply and demand situation, as well as the development trend of the global pesticide industry.

Keywords: Shaping industry resilience, maintaining long-term strategy

Du Hui, Deputy General Manager of the Crop Protection Business Unit of Qilu Pharmaceutical and Board Chairman of Huaxing Chemical, delivered the opening address, which stated that in the first half of 2023, the Chinese agrochemical industry experienced unprecedented difficulties, including overstocked products, declining purchases in terms of volume and pricing from overseas buyers, domestic competition extending to overseas markets, production transfers and other issues. Du also pointed out that increased supply, delayed demand and continued price declines are the current main industry trends. An enterprise must also maintain its local market, and efforts should be made to go global and go to the right places. Meanwhile, whether exportation-driven or local market-oriented, it is necessary to maintain ties to both international and domestic markets while trying to access the upstream and downstream industrial chains in order to become a truly outstanding enterprise. In terms of the domestic market, Qilu Crop Protection is committed to serving the domestic market while connecting upstream and downstream sectors to leverage synergies, and it is also expanding to the international market. In addition to strengthening and expanding its existing technical material production capacity, Qilu Crop Protection is relying on innovation and maintaining its R&D capacity, which is its core competitiveness and enables it to serve agricultural production in China and the rest of the world with supplies of technically advanced, differentiated and high-quality products.

Du Hui, Dep General Manager of the Crop Protection Business Unit of Qilu Pharmaceutical and Board Chairman of Huaxing Chemical

As pesticides are a necessity, their supply and demand are relatively stable. Yan Duanxiang, researcher at the Institute for the Control of Agrochemicals of the Chinese Ministry of Agriculture and Rural Affairs (ICAMA) and Vice President of China Crop Protection Industry Association, gave an analysis of the complex environment and challenges facing Chinese pesticide exports. He said that since 2011, China has reliably supplied pesticides, an important agricultural tool for production, to the global market. It is especially important to note that from 2020 to 2022, the pesticide market remained positive, and the pesticide industry achieved record development. However, since October 2022, the Russia-Ukraine conflict and the energy crisis have placed considerable pressure on the economy, leading to a severe situation. To cope with the current situation, Yan Duanxiang stressed that the Chinese pesticide industry must advance by treating the pesticide industry as a real economy; treating the pesticide industry as a high-tech industry; expanding into the international market; and promoting the modernization of the Chinese pesticide industry. With regards to the challenges, he suggested that government agencies must ensure the implementation of export policies; and industry associations need to deploy experts to study the difficulties in order to reach consensus. In addition, enterprises must reduce costs and increase efficiency, utilize their own features and advantages to achieve market segmentation and market positioning; and meanwhile strengthen their research and development to achieve innovative development.

Yan Duanxiang, researcher at ICAMA and Vice President of China Crop Protection Industry Association

Cao Bingwei, Senior Agronomist at the Int’l Exchange & Service Division of ICAMA (Institute for the Control of Agrochemicals), analyzed available export data and the changes to the product structures of Chinese pesticides over the past 10 years. Cao said that ″over the past 10 years, China’s pesticide import value has decreased, while the export value has increased. For both technicals and formulations, exports continuously rose. This indicates a gradual increase in the added value of Chinese pesticides, as pesticide exports are a driver of the growth of the pesticide industry.″ Cao then gave a detailed introduction of relevant policies in China aimed at promoting exports of pesticide products, as well as the problems that Chinese enterprises may encounter when exporting their products. Cao suggested solutions to pesticide manufacturers that are based on existing policies, pointing out the direction of future product innovation that will increase the confidence of  participating enterprises in future development.

 Cao Bingwei, Senior Agronomist at the Int’l Exchange & Service Division of ICAMA (Institute for the Control of Agrochemicals)

Huang Baiji, General Manager of SINO-AGRI, gave a speech, entitled, ″Build a Shared Global Future with Inclusive Agriculture.″ He said that the pressure on the global agrochemical market will continue in the short-term; the commercialization of GM crops will increase the demand for herbicides, especially for burndown herbicides like glyphosate; and the focus of the R&D of Chinese and foreign producers has constantly changed, gradually shifting from the creation of new compounds to the creation of seeds, traits, biopesticide and agricultural information technology. Concerning the current difficulties faced by the Chinese agrochemical industry, Huang stated that ″in the face of adversity, there is hope for the industry.″ China’s locally-made agrochemical products have reached 90% substitutability, and Chinese enterprises capable of developing novel compounds are becoming stronger. As a ″national team″ in the agrochemical distribution sector, Sion Agri has actively advocated for the establishment of a ″shared community in the agricultural chemical industry,″ which aims to consolidate resources, complement  each other, jointly build a reliable cooperative service platform, share professional supply chain management services, empower the high-quality development of the industry and improve the supply resilience and safety level of the pesticide industry chain, therefore, continuously increasing the competitiveness and presence of Chinese agrochemical enterprises in the global market.

Huang Baiji, General Manager of SINO-AGRI

Wang Rong, Chairman of Beijing Nutrichem, talked about Nutrichem’s strategic positioning. Wang spoke about Nutrichem’s various trial and exploration efforts in strategic positioning over the last 20 years. So far, the company has determined its global agrochemical supplier positioning and B2B business model, which leverage its multi-product platform advantage to meet the needs of various industrial customers. By selling high-quality crop protection products to customers, Nutrichem is contributing to the sustainable development of the global crop protection market. Wang said that the market situation of intermediates, technical materials and formulations at all levels of the agrochemical industry chain in 2023 is quite difficult and is facing considerable challenges. Wang stressed that pesticide exports are still a driver industry development, so agrochemical enterprises should aim to find the right strategic positioning and approach to be in line with the current development of the agrochemical industry. Based on an objective evaluation, enterprises should continue to carefully retune their business operations to strengthen their international agrochemical market development while considering the nature of their business operations, to create value for customers, he added.

Wang Rong, Chairman of Beijing Nutrichem

Li Hua, Project Director from China National Chemical Information Centre, talked about the current situation of the chemical industry in Southeast Asia and development opportunities for Chinese agrochemical enterprises. She said that Southeast Asia is now one of the most dynamic and promising economy regions in the world, where the agriculture and services industries are playing a key role in national economies. However, in recent years, with the large-scale transfer of manufacturing industries to this region, its proportion of the secondary industry is increasing. In 2022, ASEAN and China became each other’s largest trading partners, with their trade volumes increasing rapidly while their future cooperation appears extensive and promising. Therefore, a mature and improved cooperation mechanism is gradually forming between ASEAN and China. In addition, she spoke about the current situation, investment policies and future development strategies in six countries that may interest the Chinese chemical industry. These countries are Singapore, Malaysia, Thailand, Indonesia, Vietnam and the Philippines.

Li Hua, Project Director from China National Chemical Information Centre

Shaping a sustainable competitive edge. Yu Yang, Vice Chairman of Nantong CAC International, offered an in-depth analysis of the development approach of pesticide manufacturers under  ″new″ circumstances. Yu said that manufacturers are facing multiple difficulties, but each company has a different nature and, therefore, a different development approach. She highlighted three points. The first is ″innovation,″ which will always be the driver of development and always the top priority. An enterprise must ″go deeper″ when developing new compounds, new processes, new formulations and new business models, to reduce homogenized competition and increase their competitiveness. The second is to be ready to ″go deeper″ under the ″K era,″ an enterprise must become a leader in a certain field, whether a certain country or product type, to not be eliminated. An enterprise needs to go deeper into vertical integration to form a complete industrial chain while exploring market channels, making registration deployments and promoting one’s own brand image. The last is ″persistence.″ The agrochemical industry has a high entry requirement and requires a large investment. An enterprise should formulate and adhere to a long-term strategic plan, fully utilize its own advantage and make itself strong. For CAC International, the company has been committed to enhancing the competitiveness of its core products through technological innovation, and is continuously increasing the proportion of new compounds and sub-new/differentiated products. At present, CAC International has achieved successes in the creation of new compounds, and its first innovative product is scheduled for market release soon.

Yu Yang, Vice Chairman of Nantong CAC International

Ma Mingliang, Board Chairman of Maxunitech, shared his experiences in the ″complete industry chain″ development and market expansion of off-patent products. Firstly, he gave a briefing of the company’s current situation in the creation of new pesticides, synthetic technology research, formulation research, environmental technology research and product marketing. Secondly, speaking of the current challenges facing the agrochemical industry and the counter measures, he proposed a market-oriented and core technology-based approach that focuses on research and innovation, therefore, creating a development model with Chinese characteristics in harmony between humanity and nature. Lastly, as Maxunitech is the world’s first generic manufacturer of flufenacet, Ma used flufenacet as an example to explain the company’s approach to the continued development of ″innovation″ in five aspects, which are process technology, product formulation, utilizing technology, market promotion and application development.

Ma Mingliang, Board Chairman of Maxunitech

Zhang Jianjun, Domestic Formulation Marketing Director of Yonon, spoke about the potential for growth of L-glufosinate and the challenges in the Chinese market. From the paraquat, to the development of glufosinate, and then to the emergence of L-glufosinate, burndown herbicides have entered a new era. L-glufosinate has three special features, which are excellent functionality, a high price performance ratio, and broad application potential, which make it very competitive. In terms of social benefits and GMO application, L-glufosinate shows great potential as well. Of course, L-glufosinate will also face challenges from climate change and resistance in the future, so Yonon has been optimizing and upgrading it. Zhang believes that L-glufosinate can advance to a higher level in terms of engineering process, intellectual property development and application technology.

 Zhang Jianjun, Domestic Formulation Marketing Director of Yonon

Wang Guoping, Deputy General Manager of Nanjing Red Sun, delivered his keynote speech, entitled, ″Development of Chinese Pyridine Base Industry and the Upstream-Downstream Industrial Chain Collaboration,″ covering three aspects, which are the development history of pyridine base, and the current status and future planning of Red Sun. He pointed out that the pyridine industry chain of Red Sun is currently unique in the world. At present, Red Sun’s pyridine base has a 45% share of the Chinese domestic market, and the company possesses more than 20 invention patents while its capacity accounts for 25% of global production. Reed Sun took the lead in the formulation of various national/industry standards for the pyridine base series. For the pyridine series, Red Sun has advantages in raw materials, core technology and industry collaboration. From pyridine to chloropyridine to fluorination, Red Sun owns a large variety of famous pyridine star products, such as paraquat, diquat, chlorantraniliprole, chlorpyrifos and fluroxypyr, which is a rich product portfolio covering the entire industry chain.

Wang Guoping, Deputy General Manager of Nanjing Red Sun

Keywords: Responding to supply chain fluctuations with a cooperative mindset; correctly understanding China-India trade relations

″Difficulty″ is one of the most frequently mentioned keywords at this workshop. Ravikiran Chaudhari, UPL China Procurement Director, talked about how UPL could cope with challenges during hard times. Firstly, Chaudhari listed the top 10 reasons for the depressed overall business environment, including geopolitics, climate issues and environmental policies. He then emphasized three of his viewpoints. Firstly, cooperation is the key to confronting challenges, not only cooperation between internal departments of enterprises, but also between different enterprises. Secondly, most products suffer from overcapacity and overstocking, for which enterprises need to understand that the main goals after making money should be to invest in brand establishment, providing service, and developing technologies and patented products, rather than just blindly expanding production. Thirdly, it is necessary to stay alert for the changes in demand from the terminal market and make timely adjustment in strategies.

Ravikiran Chaudhari, UPL China Procurement Director

Shen Shaojun, Marketing Leader of Willowood Chemicals China, presented his keynote report on the experiences of Indian agrochemical business operations and international market development. He said that India is the world’s fourth largest producer of agrochemicals, with a market value of US$7.8 billion in the fiscal year 2023. As India gradually becomes a reliable substitution for Chinese pesticides, the Indian agrochemical industry has become a major player in the global agrochemical market and has grown at a compound annual growth rate of 7.4% over the last 10 years. However, the Indian agrochemical industry still relies heavily on China, with imported agrochemicals from China accounting for approximately 50 to 55% of India’s total import of agrochemicals. In recent years, due to the continuous consolidation of Indian pesticide manufacturers, the dependence on China has gradually decreased, but this will remain for a relatively long period. Lastly, he shared and exchanged ideas on Willowood’s market development experiences in the US market.

 Shen Shaojun, Marketing Leader of Willowood Chemicals China

A view of China from an Indian perspective. Fan Guoqiang, General Manager of Beijing LuckyStar Co., Ltd., gave a presentation on the opportunities and challenges in the Indian agrochemical market. He said that in the last five years, India’s agrochemical exports increased 108%, with a compound annual growth rate of 13%. Compared to 2020-2021, India’s importation of pesticide formulations from 2021 to 2022 showed an upward trend while imports of pesticide technical decreased. He added that although the Indian agrochemical market is a market with a dependence on imports, its exports have grown faster than imports in the last decade. Meanwhile, due to the backward integration in Indian manufacturing, its dependence on imports may decrease year by year. Regarding the pesticide trade between China and India, Fan said that China and India are both high-output and high-demand pesticide producing countries, with a strong complementarity that could create opportunities for cooperation. However, the two countries are both export-oriented economies, which will also lead to more and more competition in the future. Fan then analyzed the pesticide trade between China and India through case studies based on his personal experiences. Lastly, Fan stated that there are both opportunities and challenges with regards to the cooperation between the Chinese and Indian pesticide industries, including in terms of value, technology, policy, brand and product. The biggest challenge is their corporate strategies and business philosophies, he noted, stressing that companies should not focus on marketing when managing production in a factory.

Fan Guoqiang, General Manager of Beijing LuckyStar Co., Ltd.

Keywords: Perception of changes in overseas market; cognition of new ″players″ and new models

The keynote report from Hu Yong, General Manager of Ningbo Generic Chemical Co., Ltd., addressed the issue of strategic thinking and practices in international market development. He said that China’s chemical and agrochemical industries have a strong industrial chain advantage, which must be fully utilized by enterprises to advance in the international market, backed by China’s strong industrial advantage. On the other hand, a foreign trade company has had various advantages, such as rapid transformation and quick decision-making. Ningbo Generic Chemical Co., Ltd. is committed to the export trade and overseas market development. The company uses localized B2B sales to advance its selling, while for B2C, the company continues to spend on terminal markets and technical services. Hu shared his ideas on overseas market development, overseas independent registration, overseas team building and overseas sales.

 Hu Yong, General Manager of Ningbo Generic Chemical Co., Ltd.

In marketing, it is necessary to build a brand image and control channels. Wang Ming, Board Chairman of Shandong Kesai Agrochemical Holdings Co., Ltd., shared the company’s ″high-quality and differentiated″ brand marketing experience in the African market. As a pesticide company specializing in marketing and trading, Kesai Agrochemical Holdings entered the African market at a much earlier date. After many years of hard work, Kesai Agrochemical Holdings has gained popularity in African markets, such as Nigeria and Cameroon. Over the past five years, the company has begun to expand in Ghana and Cote d'Ivoire. Wang said that the company’s corporate brand strategy is to integrate its  corporate brand, product brand and service brand. How do you build a brand? The answer is to set a strategy, form a team and create a system that fits the company’s safe, efficient, profitable and sustainable business model, which will ensure its continued profitability.

 Wang Ming, Board Chairman of Shandong Kesai Agrochemical Holdings Co., Ltd

Sotus International is one of the leading importers, exporters and distributors of agricultural inputs in Thailand, being engaged in agency for patented products. Chirat Prathuangwong, president of the company, gave a briefing of the situation in the Thai pesticide market, which covering various areas such as types of imported products and crop distribution in the country. Prathuangwong highlighted on four aspects of the company’s development history, including an analysis of its internal team, the selection of its external partners, its innovation of major products, and its overall strategic planning. Moreover, through the case study of Dinotefuran and spinetoram, he shared Sotus’ criteria for selecting novel active ingredients, as well as its experiences in marketing and promotion experience in Thailand.

 Chirat Prathuangwong, President of Sotus International

Jean-Guillaume Delpierre, Head of PR China, Certis Belchim, presented the strategic planning and future development of the Mitsui Nutrition and Agro Business Unit, via Mitsui & Co’s European subsidiary, Certis Belchim, to highlight its core product line, partnerships and research spending, as well as how Mitsui & Co entered the European market. At the end of presentation, Delpierre said that although the EU’s approval of active ingredients is decreasing year by year, in general, the EU’s pesticide market is growing steadily, especially biologicals that are growing at an accelerated rate. Going forward, the European pesticide market will face many challenges, mostly from sustainability and climate-related issues.

 Jean-Guillaume Delpierre, Head of PR China, Certis Belchim

After hearing about the business opportunities in the European market, the first issue that concerns participating companies is the high entry standards of the European market. Therefore, Yizhenwang, Business Manager of Redebel Regulatory Affairs, discussed one of the potential solutions. Redebel SA is a leading company in the processing of approval applications for crop protection products and active chemical substances. In 2016, Redebel Regulatory Affairs was established, specializing in product approvals to assist enterprises in conducting pesticide efficacy trials required by the registration process within the EU region. Yizhenwang gave a detailed introduction to the registration process applicable to products delivered to the EU, with a detailed analysis of each step of the registration process, where problems may occur. By analyzing the changes in the EU’s pesticide regulations over the past decade, the direction of future regulatory changes in the EU can be predicted and future opportunities following trends may be forecasted. Yizhenwang clearly stated that global warming made pest control more difficult in northern Europe, which may create increase the company’s business in the European market.

 Yizhenwang, Business Manager of Redebel Regulatory Affairs

Zhang Jingjing, Senior Experts at REACH24H, focused on the fast market access of formulations into the EU, as well as the RNA pesticide registration process in the US. She said that the EU has a very high technical data requirements for registration, which leads to a long test cycle, high test costs and a long file preparation cycle. In terms of types of registration, there are two types of formulation product registration in the EU, which are Art33 and Art34. Art33 is a common type of formulation registration, while the Art34 uses quoted data for registration and is more complicated as it has many prerequisites. Zhang gave an introduction to the RNA pesticide registration process in the US. For exogenous RNA pesticides, the USEPA has introduced a special type of registration, which is currently placed under the Plant-Incorporated Protectants (PIP). In terms of data, the registration data of the first registrant can be used as a reference. Overall, the testing workload is not considerable.

 Zhang Jingjing, Senior Expert at REACH24H

Asia is a fast-growing region where China and India are the two major markets. Just like accessing the European market, the primary issue facing enterprises is accessing the Indian market. Vaibhav Aggarwal, regulatory expert in India and Founder of Tephra Bioscience, gave a detailed introduction to the Indian agrochemical market, explaining the market entry process and the step-by-step process of product registration in the Indian market. Aggarwal also provided valuable advice about the critical timing and important stage of market entry, particularly for Chinese enterprises that wish to access the Indian market. Cui Gaofeng, China Partner of Tephra Bioscience, also shared case studies to illustrate the advantages and disadvantages of two cooperation models previously adopted by Chinese companies for exporting products to the Indian market, while using Chinese products, especially formulations, as an example to warn Chinese companies of the difficulties and potential mistakes in the Indian market, so full and effective preparations be made in advance.

 Vaibhav Aggarwal, Indian registration expert and Founder of Tephra Bioscience 

 
Cui Gaofeng, Tephra Bioscience’s China Partner

Wang Xun, Vice President of Pengdu Agriculture and Animal Husbandry Co., Ltd., explained the dynamics of the Brazilian food grain market and the new trade model for pesticides between China and Brazil. Pengdu Agriculture and Animal Husbandry operates its business in Brazil mainly in barter trade. According to Wang, a firm’s barter trade can stifle profitability. Meanwhile, the Brazilian agricultural material market is estimated to grow by 150% over the next decade, reflected by the growth of agricultural acreage, the rise in the use of new agricultural materials, and the increasing use of agricultural products per unit of land. In addition, as affected by the China-US trade conflict and the Russo-Ukrainian conflict, China has imported more soybeans from Brazil in recent years and began to import Brazilian corn at the end of 2022, making Brazil an important cornerstone of China’s food security initiative and a diversified origin of imports. China and Brazil have attached great importance and are complementarity to each other in the international cereal and oil markets.

 Wang Xun, Vice President of Pengdu Agriculture and Animal Husbandry Co., Ltd.

InVivo operates four major business segments, which are the grain trade, industrial bakeries, retail and agriculture. Among them, Bioline, as a subsidiary of InVivo, is responsible for the agricultural business under direction of the group CEO, Laurent Martel. Due to the busy harvesting season in European agriculture, Martel joined the event virtually, briefing participants on how Bioline choose the Latin American market to be a key part of its development strategy. One of Bioline’s development strategies in the Latin American market is the so-called ″farmer to consumer strategy.″ Through the selection and development of the supply chain, Bioline can manage stocks levels, ensure product quality, and lobby governments in terms of regulation, therefore, promoting the business development of the company.

Laurent Martel, CEO of InVivo Group

Alberto Araujo, CEO of Belagricola, participated in the workshop via video conferencing. In his video, Alberto Araujo gave a detailed introduction to the model of consolidation of Brazilian distribution channels, which are the primary suppliers on the Brazilian market. Araujo used the data of the Brazilian retail organization, Andav, to analyze types of businesses, such as crop protection and biostimulant products, in terms of market share, growth rate and market volume since the start of 2023. Based on the analysis, Araujo suggested four major industry trends for Brazilian agriculture, which are the effective utilization of biologicals, precision agriculture and digital farming, sustainable agricultural practices, and advanced crop protection.

Alberto Araujo, CEO of Belagricola

Reporting by Nino Wang, Longjian Huang, Annie Feng