However, as more and more problems appear in domestic pesticide industry, such as overcapacity, over competition, lack of innovation capability and chaotic market management, the survival condition of domestic pesticide enterprises has changed from bad to worse.
As CCM International reported in the last issue, the high-profile list, namely 2011 China Top 100 Pesticide Manufacturers, showed the ranking of 100 domestic pesticide manufacturers and their revenues in 2010. It is till now the most authoritative version of pesticide enterprise rankings in China
Although it should be excited for companies who are on the list, most of them feel very depressed.
It is very disappointed to see the result of comparing the total revenue of most competitive domestic pesticide manufacturers to one foreign pesticide giant, namely Syngenta. According to the list of 2011 China Top 100 Pesticide Manufacturers, the total revenue of the first 100 pesticide manufacturers reached USD7,803.62 million. However, the pesticide revenue of Syngenta in 2010 reached USD8,900 million with a growth rate of 3% over 2009.
"We are just long-term contract workers of foreign pesticide giants even though we think we are good enough," said Professor Zhang Yibing from Shanghai Pesticide Research Institute. And this point of view has been agreed by most pesticide players in China
"We provide technical products with high quality to foreign pesticide giants but only gain little OEM (original equipment manufacturer) profit," said an insider from a listed pesticide manufacturer.
Actually, most of the pesticide manufacturers whose names appear on the top of the list have kept good relationships with foreign pesticide giants in recent years. For example, Zhejiang Wynca Chemical Industry Group Co., Ltd., Hubei Sanonda Co., Ltd., Jiangsu Changqing Agricultural Chemical Co., Ltd., etc. are the main pesticide suppliers of Bayer in China ; Jiangsu Yangnong Chemical Co., Ltd., Nantong Jiangshan Agrochemical & Chemicals Co., Ltd., Jiangsu Huifeng Agrochemical Co., Ltd., etc. are the main pesticide suppliers of BASF in China
Although China is considered to be one of the largest pesticide production and consumption countries in the world, its pesticide industry is highly depended on export with an export dependence ratio of over 50%. Its pesticide export volume reached over 1 million tonnes in the past three years. In 2010, domestic pesticide output reached 2.34 million tonnes and the export volume reached 1.22 million tonnes.
Eyeing that the price of raw materials, cost of environmental protection and labor, RMB appreciation, etc. rapidly rose in H1 2011, domestic pesticide manufacturers suffered great pains in running pesticide business this year.
The identity of long-term contract workers being labeled on domestic pesticide manufacturers bothers them seriously now and then. Although they have been considering changing the situation through technology innovation, with Chinese government's high-profile encourage but poor continuous investment in pesticide R&D, the development of pesticide innovation is painfully slow. Thus, aiming to survive in domestic pesticide market and account for more market shares, most domestic pesticide enterprises are more inclined to the production of off-patent pesticides and OEM production for foreign pesticide enterprises. Shaking off the identity of long-term contract workers means a lot to domestic pesticide players. However, without the support from strong policies and more investment in pesticide R&D from Chinese government, there may still be a long way to go.
Source: Crop Protection China
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