Tuesday, January 7, 2014

Cooperation between seed enterprises and research institutes: undesirable

In 2011 the State Council of the People's Republic of China issued the Suggestions for Accelerating Development of Modern Crop Seed Industry (the Suggestions), which clearly laid emphasis on "leading and actively mobilizing research institutes and colleges to gradually withdraw from commercialized breeding, and to establish the dominant status of technological innovation in seed enterprises". However, the results have been unsatisfactory.

Since the birth of China's seed industry, the breeding, production and promotion of seeds have been totally out of joint in China. In order to establish the dominant status of technological innovation in seed enterprises, commercialized breeding should be gradually removed from research institutes. Since the issuance of the Suggestions two years ago, there have been huge difficulties in the reform of agricultural research systems, along with strong resistance and few contributions.

On the one hand, relevant departments have not attempted to promote reform and to rationally allocate resources to remove commercialized breeding from research institutes from the macro policy perspective; instead they advocate the collaboration between seed enterprises and institutes, or the R&D alliance between the two sides. On the other hand, officials and scholars conduct investigations on the collaboration between seed enterprises and institutes, and the cooperation is also a hot topic on magazines. Authoritative experts observe that "the reform goes from bad to worse under the guidance of misconception".

It is feasible for those seed enterprises that are qualified for the research system "breeding, production and promotion" to voluntarily cooperate with institutes on seed researches, to buy varieties from the latter, or to temporarily transfer researchers from the latter.

However, the cooperation is not what the development of a seed enterprise relies on. To place the cooperation in a dual-track system with double benefits means that research institutes sell their varieties to enterprises, and that seed enterprises buy varieties from institutes. But the contrasting rules and intentions of the two sides cause seed enterprises to give up technological innovation, and to become a permanent "seed supermarket" instead.

Disagreement on time for cooperation

Scientific research is an incremental process, and the breeding of a variety takes 7-8 years, along with unpredictability, while seed enterprises hope to get the results as soon as possible, usually without a clear understanding of the time required for breeding. As a result, they may quit the cooperation at any time when getting no positive short-term outcome.

Conflicting cooperation purposes

For research institutes, the breeding of varieties is aimed at publications and academic titles, while product conversion is often considered secondary. Scientific evaluation of a newly developed variety usually takes five years, but seed enterprises buy existing varieties for the purpose of instant profits. Thus, both sides have conflicting aims and conflicting purposes for entering into a cooperation.

Enterprises signs contracts with varying ranks of research units, such as institutes, chambers, research groups, and even individuals, which hints at the inefficiency of legally binding agreements. Therefore, the alteration or the adjustment of leaders and research of the institute also influences the cooperation. Furthermore, cooperation between seed enterprises and research institutes is all about unconstrained contracts and purchases. Because of that, a long-term stable partnership cannot get established between both sides. Seed enterprises expect instant success, and they may break up the partnership if they cannot obtain expected profits.

Disagreement on variety rights

Seed enterprises pay institutes for R&D on seeds in the hope of obtaining exclusive rights on a seed variety and to obtain exclusive rights to explore the market, which help the company elevate its reputation. However, institutes are not willing to make their resources and breeding information open to society. Institutes are willing to transfer variety distribution rights to multiple enterprises in order to expand the promotion of the seed variety, and to possibly increase their eligibility for State Science and Technology Prizes and other awards. Thus, cooperations between seed enterprises and research institutes prioritise the institute's interests over the seed enterprises' interests, which creates conflict.

Divergence in economic foundations

Nowadays agricultural research institutes still follow the planned economic system, while seed enterprises have just entered the market economy. Cooperation between the two parties belonging to totally contrasting economic systems makes it difficult to maintain a balance between competition and profit distribution. Thus, the so-called "industry-university-research cooperation" between the industry and researchers based upon a market orientation and sharing interests and risks are unattainable.

The market economy has so far been the most efficient economic system, and enterprises boost its development by way of science and technology. The developmental experience of the world's developed countries proves that enterprises are the mainstay of the development of the market economy, of technology innovation, and of the formation of independent intellectual property rights. Also, the establishment of an innovation-oriented country and the improvement of independent innovation rely on the support from thousands of innovation-oriented enterprises. For every country, under the current situation of rapid global economic development, the decline of enterprises will inevitably lead to the downfall of the national economy; similarly, the rise of enterprises will certainly boost the national economy.

Table of Contents of Seed China News 1312:
Policy on grain purchasing and subsidy implemented again
Cooperation between seed enterprises and research institutes: undesirable
GM foods rejected by most Chinese
Beidahuang Kenfeng terminates cooperation with SOPO on backdoor listing
Winall Hi-tech to establish three subsidiaries
Oversupply in China's corn seed market and revelations from it
Brief introduction of Guangdong corn seed market
Analysis on corn variety Demeiya
Analysis on China's cotton seed market from industrial chain perspective
Inner Mongolia's grass industry confronted with challenges

Seed China News, a monthly publication issued by CCM at the end of every month, mainly covers a diversity of topics, including market dynamic, company dynamic, crops, seed market, etc. With the latest news in seed industry and in-depth analysis on government direction and market competition, Seed China News can provide you with valid information which would help you make rational decisions in investment, production, marketing, etc.

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