Can China’s Agrochemical Industry Find Its Way into the Overseas Market?

Can China’s Agrochemical Industry Find Its Way into the Overseas Market?

China’s agrochemical industry is facing tougher challenge when the 12th Five‐Year Plan on agriculture came out in May 2011. Stiffer policy on environmental protection and requirement on optimization and integration of the agrochemical industry can be found in the plan. What does it mean to this industry and will this be a stepping‐stone for its breakthrough in the overseas market?

The current agrochemical industry is stuck in the high energy consumption trap due to its poor technology applied in the production, which is also a factor limiting the expansion of agrochemical companies size. Another problem that confronts the agrochemical industry in China is its blind production and investment on the same product. Zhonghui Wu, founder of CCM International Ltd., shared his views according to his years’ devotion in this market. “China’s agrochemical industry should develop products facing the end‐users instead of producing a current heated product all in a rush, the challenge lies in which is the extension and expansion of the value chain.” he said it in his interview with the Agriculture and Market Magazine.

The short sight in agrochemical production of market players is easy to cause overcapacity in a hot product. The profit‐driven concept blinds the foresight of the healthy and steady development of the whole industry. Take the herbicide glyphosate for example, when it became one of the most profitable herbicides in 2007, it attracted a bundle of investments which soaked up too much and the whole industry soon came down to its valley in 2009.

For the sustainable development of the whole industry, government policy guidance is also important in the industry optimization because it leads to rational production and investment.

But the key factor still lies in the enterprise itself. Bring down cost by high‐tech application in the production is a strategy to succeed in the competitive market. Combining the efforts on the industry chain extension and the differentiation in production can improve the competiveness and viability. The traditional Chinese business style is that the decision maker, usually the boss, splashed out a decision without much thought, regardless the current production situation at home or abroad and jumped into the hottest product, which is dangerous to its own investment and mostly importantly, dangerous to the whole industry. Mr. Wu suggested decision makers to turn to the third party data provided by professional consultancy company before they start a program, especially when the program involves the overseas market, which is an effective way to guarantee the investment proved by most of the western countries.

It is interesting to find that foreign enterprises easily adapted themselves to the Chinese market while the Chinese agrochemical companies found it hard to break the wall to the overseas market. There is still a long way to go for this industry fighting for its own position in the world by integrating and optimizing with joint efforts of government and the enterprises of their own.