Huifeng's New Strategy: Sticking to Traditional Business and Seeking New Opportunities Worldwide

In recent years, as prices of agricultural products languished at low levels and the world economy remained feeble, the global market for agrochemicals changed a lot for the worse and suffered from a weak demand. With increased industry consolidation, mergers and acquisitions intensified during this period. Multinationals are huddling together to steer out of troubled waters, a scenario that led to profound ramifications on agrochemical firms the world over. Huifeng (Jiangsu Huifeng Agrochemical Co., Ltd.), a company widely known in the industry for its prowess in producing agrochemicals, has built an international reputation as a supplier of high-quality pesticides after years of sweat equity. Given how the industry is performing, and where the market is heading, the company must not only hold fast to its traditional business but innovate to grow further. Actually, Huifeng has been exploring ways of diversification, but under its tenet, also has a clear focus on its home turf. It is here that the business can be expanded unfettered but it cannot cross over into industries that are irrelevant to the company's core competence. Recently, Zhong Hangen, Board Chairman of Huifeng, described the company's blueprint in an interview with AgroPages. 
 

          

Sticking to traditional business and taking a two-pronged approach to development 
 

Since its establishment over two decades ago, Huifeng has focused on producing premium technical materials and preparations, providing customers with quality and consistently superb services. With the domestic market experiencing drastic changes, Huifeng is diversifying from being a producer to becoming a platform. 
 

Fungicides are its trump cards. In particular, prochloraz and epoxiconazole are the sources of its competitiveness, making its brand influential not just in China but across the globe. According to Mr. Zhong, Huifeng is capable of producing 6,000 tonnes of prochloraz and 1,000 tonnes of epoxiconazole a year. In 2016, prochloraz alone brought upwards of 300 million yuan in sales revenue. 
 

The company has independently developed prochloraz-manganese chloride complex and prochloraz-copper chloride complex. In addition, it has finished R&D for over 10 mixtures, for example, by combining prochloraz with cymoxanil, epoxiconazole, tebuconazole, carbendazim, and kasugamycin, respectively, plus prochloraz-copper chloride complex with carbendazim. A unique product lineup that protects most crops from fungi has taken shape, based on prochloraz. The full range of product specifications it offers can satisfy the needs of different customers and markets. Mr. Zhong also told AgroPages that Huifeng was engaged in a global effort to protect its intellectual property on these R&D achievements. By the time this interview took place, it had applied patents globally for the prochloraz products. 
 

Driven by Huifeng's endeavor, a growing array of prochloraz products is being registered. As of now, such products have been registered for 33 categories of crops and 38 kinds of fungi. This kind of wide scope has not been seen since carbendazim. 

In recent years, Huifeng adopted a two-pronged approach to development. On the one hand, it kept traditional business growing steadily. On the other hand, it cast its eyes on the entire industrial chain of agriculture, centering on pesticides while expanding upstream as well as downstream.
 

In November 2014, 16899.com, an investment of Huifeng, made a high-profile debut. Two years on, Huifeng developed this website into an extremely useful platform, which has helped the company reap a bumper harvest, setting up channels for distributing agricultural supplies in the downstream sector. In 2016, sales on 16899.com topped 300 million yuan, a 3.5-fold increase as compared to the previous year. Huifeng has gradually diluted its own products’ sales as a percentage of the total on the 16899. com, which, therefore, can be more of a platform for the whole industry. At first, the platform sold non-patented bulk products and then moved on to sell new products and differential ones, including products that had no prior registrations in China, had exclusive registrations, or were protected by patents. In future, 16899.com will screen products more rigorously and introduce a multitude of new products, aiming to become an industrial platform that brings concrete benefits to farmers. 
 

In the upstream sector, Huifeng entered the petrochemical industry to map out a big landscape by building a petrochemical warehousing and logistics platform, among other things. Drawing on its advantageous location near the Dafeng Port of Jiangsu and the benefits that the surrounding industry cluster offered, the company has constructed a petrochemical warehousing and logistics zone, which is intended to become an influential trade platform for petrochemical raw materials in East China, thus generating additional profits for the company. For that, Huifeng is forging close partnerships with downstream firms and nearby industrial parks to improve its supply chain. 
 

Mr. Zhong revealed that Huifeng would made a foray into finance and create an investment fund, which would make specialized investments in promising market segments like big health, chemicals, pesticides and smart manufacturing. Since none of its diversification deviates from its primary strength, Huifeng is able to tap into its knowledge, experience, and resources to identify and support excellent projects. 
 

Innovating to plow the international market 
 

During its more than 20 years of in-depth cooperation with multinationals, Huifeng has accumulated and honed its own capabilities. It closely follows the dynamics of the international market. Mr. Zhong told AgroPages that one of the things that set Huifeng apart from contract manufacturing and trade firms for technical materials is that it has always been a market-oriented firm that produces its own formulation products. For years, it has developed products and applications in the Chinese market while watching the international market attentively. It will be more visible internationally. 
 

Firms dealing with patented pesticides across the world are in the middle of a sweeping consolidation. Meanwhile, competition among firms dealing with non-patented pesticides has become ever fiercer. How to avoid fighting for a share in a market packed with covetous players and make the market bigger instead is a question that guides Huifeng's strategy as it makes inroads into the international market. 
 

Mr. Zhong reckoned that if the traditional business of agrochemicals is to transform and go global, it must rely on incessant product innovation. The global market for plant protection has long been beset with the difficult task of preventing diseases caused by bacteria. In this area, prevention methods are scant, technologies are obsolete, and the overall scale is limited. Even multinational behemoths are short of products and solutions. All this means a huge market potential. Huifeng has always valued the development of proprietary products. It has figured out a number of directions, including the prevention of bacterial diseases, where it can offer solutions that underpin significant growth. Huifeng expects these products, which have proven their ability to tackle practical issues faced by farmers in China, to serve the rest of the world. 
 

In terms of innovative new products, Mr. Zhong said, Huifeng had successfully introduced benziothiazolinone for agricultural use and had developed a series of benziothiazolinone formulations plus patented mixtures with other compounds in its push to go global. Apart from China, the products involved had gained patents in the US, Europe and Australia, etc. Since 2016, the company has obtained patents for its products in more countries. In China, it has applied for 109 invention patents and 15 international invention patents. By now, it has 63 products patented in China. 
 

In this globalized era of resource sharing, Huifeng has chosen to cooperate with the world's leading firms in complementary partnerships so that it can crack high-end markets. In August 2016, Huifeng joined hands with AMVAC (Amvac Chemical Corporation), an American firm taking the lead in plant protection, to found an innovative company in Hong Kong. Through this platform, Huifeng will inject its innovation, expertise and experience into the global market. This way, it can come up with differential solutions and create new market value, staying away from heterogeneous competition. Moreover, this platform can carry resources that may come into being during the process of industry consolidation. Such resources can achieve synergies with existing business, giving Huifeng a boost as it adapts to changes and takes on challenges. 
 

Mr. Zhong told AgroPages that Huifeng would cooperate with the AMVAC in a deeper sense when it came to technology development and applications related to products intended for specific market segments. On the one hand, they would try to get a foothold in North America for Huifeng's innovative proprietary products while on the other hand, they would promote AMVAC's proprietary products and pesticide application systems in China. A number of technology transfers have been reached between the two sides on the platform provided by the joint venture. When these technologies take root in China, they will bring epochal changes to the Chinese market. 
 

 

In the future, Huifeng will be a global channel and service provider instead of a traditional producer. However, Mr. Zhong stressed that traditional business would continue to be the company's cornerstone and the company would spare no efforts to guarantee quality and make good on its promises to customers and markets. 
 

As regards the company's strategy for preparations, Mr. Zhong revealed that Huifeng's business would have 5 divisions where it could pursue refinement and professionalism. These are, (a) traditional offline business; (b) online business; (c) third-part business, which mainly involves rights granted by or to multinationals and other partners; (4) non-agricultural business; and (5) promotion of patented products. 
 

He appeared to have high hopes for the innovative firm, believing that there would be unlimited possibilities in its future market exploration. When opportunities emerge from new proprietary products, Huifeng will first share them with its existing partners. Since projects will last long, Huifeng will keep investing and working to push for progress.


Please download AgroPages' latest magazine - 2017 China Pesticide Suppliers Guide to see more.