Since the policy, namely
Regulations of Professionally Unified Management on Pest and Disease
(Regulations for short), has been carried out by the Ministry of Agriculture of
China from 1 Aug., 2011, China has
largely promoted unified management on pests and diseases in the whole country.
So far, some provinces in China
have well implemented the Regulations and achieved good effect on pest and disease
management, based on CCM International’s latest issue of Crop
Protection China News.
Although the policy has been well
implemented and largely supported by peasants in some provinces in the past few
months, it, in deed, brought impact to traditional pesticide sales model in
these areas.
Take Hunan Province for example, the number of the professional
organizations providing unified pest and disease control services reached over 1,313 in 2012. The total management
areas in the contract signed by these organizations with peasants for offering
services reached 1 million ha., accounting for over 20% of the total crop
planting areas in Hunan
Province this year.
As the professional team's demand
for pesticide is much larger compared with that from single peasant, usually
they'd rather choose to directly purchase pesticides from pesticide enterprises
than from retailers and dealers. By this means, pesticide purchasing of
professional teams avoids paying extra cost not only to retailers, but also to
those pesticide dealers in the middle link of traditional pesticide sales
model.
Since the large amount of
pesticide sales has been suddenly cut off by unified management services, many pesticide
retailers suffered great loss in the past few months. It is reported that over
8,000 pesticide retailers have went bankrupt in Hunan Province
since the Regulations was carried out.
Actually, not only pesticide
retailers and dealers suffered loss in the large promotion of unified
management services, but also some of the large pesticide enterprises may
confront big challenges.
Shenzhen Noposion Agrochemical
Co., Ltd. (Noposion), one of the large pesticide formulation enterprises in China, now owns
two different sales models. One is that Noposion directly sells pesticide to
county-level distributors. These county-level distributors then sell pesticides
to retailers. This kind of sales model contributes to most revenue of Noposion.
In late 2009, Noposion started to
build another sales network in consideration of its long term
development–selling pesticides directly to retailers. Aiming to build up the
new sales model as fast as possible, Noposion continuously added a lot of
investment in the past two years which led to a decline in net profit growth
year by year.
Although Noposion has disclosed
that the construction of the new sales model was still under way, some insiders
doubted that the new sales model will not perform as well as the company imagined.
And they believed that the pesticide sales model of unified management services
which ignores the sales links of pesticide in traditional sales model will
become one of the main factors that impact Noposion's new sales model.
Another pesticide enterprise in
China, namely Jiangsu Huifeng Agrochemical Co., Ltd. (Jiangsu Huifeng), also
considered unified management services as one of the main impact factors of its
IPO project, namely the county-level pesticide marketing network construction
project.
Considering the difficulties it
may face in the process of building up so many retail stores and the impact
from unified management services, the company decided to change the raised
project into building up Shanghai
marketing center.
Aiming to cut down the number of
sales links, directly supply pesticides to retailers and decrease the cost of
peasants, Jiangsu Huifeng planned to widely promote the new sales model in China, namely
Pesticide Direct Supply and Sales, by raising money from IPO (it got listed on
27 Oct., 2010). The final aim of the new
sales model was to build an ERP (Enterprise Resource Planning) information
management system and set up over 20,000 retail stores in county level.
As China now dedicates itself to
developing modernized agriculture, the promotion of unified management is
considered to be an irresistible trend. The traditional sales model in China may
experience great changes in the first place during the promotion process. Large
pesticide dealers in China
may make some changes to their pesticide sales model or set up professional
management teams to adapt the trend. Laying effort to build up good
relationship with large professional unified management companies is also
considered to be a good choice.
Background information
Professionally unified management
on pest and disease is a kind of socialized, large-scale and intensive pests
and disease control services which are led by professional teams with
well-trained and experienced technicians. Eyeing the better effect on pest and
disease management and lower cost it brings to peasants, it has been
successfully promoted in many developed countries in the world. Although China has tried
to promote this kind of measure years ago, it failed to wholly promote it to
the whole country. The releasing of the Regulations is considered to be Chinese
government's first official policy to promote professionally unified management
on pest and disease and it also showed the Chinese government's great ambitious
of wholly promoting the management measures in China.
Content of Crop Protection China News 1213:
Unified
management bothers traditional pesticide sales model
HS Code
classification of paraquat TK raises dispute between enterprises and GAC
Total
import volume of corn increases sharply from Jan. to May 2012
Use of
abamectin ointment may be legalized
China accelerates integration of pesticide industry
Anhui
Huaxing to relaunch reorganization
Jiangsu
Yangnong may see good performance in 2012
More and
more pesticide manufacturers set foot in fertilizer industry
Sipcam
Agro China
to put pesticides into Chinese market
Crop Protection China
News, a semimonthly
publication issued by CCM International on 15th and 30th(31st) of every month,
aims to gain a deep insight into Chinese market, supply the latest market data
and strategy support, analyze the newest legislation and policy and grasp the
future market trend.
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