Friday, September 2, 2011

More Players Enter Seed Industry

A number of companies from different industries are getting into seed business, in order to benefit from the good development tendency of domestic seed industry. Under the situation of industrial reorganization promoted by the government, the entrance of those companies would bring more competition to seed business while accelerating industrial prosperity, according to CCM’s August issue of Seed China News.

Bright Food (Group) Co., Ltd. (Bright Group), a leading food conglomerate headquartered in Shanghai City, announced the establishment of an affiliated company called "Bright Seed Industry Co., Ltd." (Bright Seed) on 18 Aug. 2011. It is understood that, Bright Seed is a wholly-owned subsidiary of Bright Rice Industry Co., Ltd. (Bright Rice) which is a subsidiary of Bright Group.

According to Wang Zongnan, president of Bright Group, the newly founded company shall focus on building commercial breeding system, aiming to develop into a national seed enterprise with integration of breeding, propagation and promotion.

Bright Seed has signed licensing agreements for new varieties with some research units, such as Shanghai Academy of Agricultural Sciences (SAAS), Wujin Rice Research Institute (Jiangsu Province), etc., total contract value reaching USD3.26 million (RMB21 million). The company has been authorized by Shanghai Academy of Agricultural Sciences to operate some new varieties of japonica rice and beer barley.

In order to build a platform for crop breeding, Bright Seed is going to carry out extensive and deeper cooperation with research units or universities. In the early period, the company probably chooses Shanghai suburbs and Northern Jiangsu as primary markets, mainly selling rice seeds and wheat seeds.

Bright Seed intends to establish its perfect sales network, through cooperation with seed distributors of counties. The company also says, it will cooperate with 1-2 large grain seed enterprises of Yangtze River Delta region before 2015, to expand its sales market.

It is worthwhile to note that, Shanghai Government just issued the implementation guideline of developing modern seed industry on 5 Aug. 2011. It can be speculated that Bright Seed would benefit a lot from government's preferential measures including financial support, R&D subsidies, tax relief, etc. Besides, the competitive environment was relatively relaxed for Bright Seed, as there have been only a few seed companies possessing breeding capacity in Shanghai.

As a large enterprise group, Bright Group already owns four listed subsidiaries, business domain covering modern agriculture, food manufacturing and chain commercial industry. With tremendous capital and perfect industry chain, its new seed business would obtain fast development in future.

Sichuan Leshan Fuhua Agrochemical Technology Co., Ltd. (Sichuan Fuhua), a large group centering on pesticide production, also announced to get into seed business early this year. The company has been trapped in poor glyphosate business, due to the severe overcapacity in glyphosate industry.

According to Zhanghua, president of Sichuan Fuhua, the company plans to acquire several seed companies within 2011, investing greatly to build breeding bases and an R&D center. It is expected that the company shall build the seed sales network by setting chain stores and on-line shops.

It was reported that Sichuan Fuhua has carried out cooperation with Sichuan Agricultural University and Leshan Institute of Agricultural Sciences, in breeding research and project building. Besides, the company is also seeking cooperation with foreign companies, in order to develop the transgenic seed business.

At present, Sichuan Fuhua owns a seed subsidiary, Sichuan Zhengqi Agriculture Development Co., Ltd. (Sichuan Zhengqi), which was founded in 2002. The subsidiary has been mainly engaged in sales and production of hybrid rice seeds and hybrid corn seeds. With operating rights of a number of rice varieties and large area of rice seed production bases, Sichuan Zhengqi has strong competitive advantage in local area.

Sichuan Fuhua owns great investment capacity and solid sales network of pesticides. If the company is able to obtain competitive crop varieties and strengthen the R&D capacity by collaborating with research institutes, its momentum of seed business should not be ignored.

Guangdong Tianhe Agricultural Materials Co., Ltd. (Guangdong Tianhe), a leading distributor of agrochemicals in Guangdong Province, already founded a seed subsidiary in late 2010. It chose to first distribute vegetable seeds to initiate its seed business.

Guangdong Tianhe has introduced several vegetable varieties from Syngenta, including sweet corn varieties, cabbage varieties, spinach varieties, etc. The company has maintained a good relationship with Syngenta for a long time before the cooperation on seed business. Besides, Guangdong Tianhe also markets vegetable seeds, such as bitter gourd varieties, eggplant varieties, etc., from Guangzhou Vegetable Science Research Institute.

The company has a strong distribution network of pesticide and fertilizer, which should be of great help to the marketing of vegetable seeds. Meanwhile, the addition of Guangdong Tianhe would make the competition of vegetable seed market more intense especially in Guangdong, since there have been a large number of vegetable seed companies in local.

Overall, adequate funds, good relationship with research units and governments, and perfect sales network are all essential for new players to get into seed industry and compete with a large number of existing counterparts. With the entering of new competitors and the promotion from the government, China's seed industry is going to see more transformation in future.
(Guangzhou China, September 1, 2011)

Content of Seed China News 1108:
Administration of Seed Industry to be founded
Seedling industry prospering in Shouguang City
More players enter seed industry
Hefei Fengle underperforms in corn seed business
Shandong Denghai's performance declines in H1 2011
Gansu Dunhuang sufferes loss in H1 2011
Liaoning Dongya considered another partner of foreign counterparts
China's soybean planting area continues to decrease
China makes breakthrough in brown planthopper-resistant rice
Seed treatment in rice needs urgent improving

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