Page 174 - 2022 White Paper on the Business Environment in China
P. 174
2 White Paper on the Business Environment in China
Agrochemical Industry will be able to expand the net margin of generic
AIs, enhance the yield of synthesis, and control key
The number of companies in the Chinese impurities. This will favor the larger companies, as
agrochemical industry will continue to decrease in China is expected to reach peak carbon emissions
the 14th FYP. New M&As will happen most probably by 2030 with a goal of carbon-neutrality by 2060.
among top 50 leading agrochemical companies in Only competitive manufacturers can contribute to
China. The big manufacturers will use their capital to this goal. So, the factor will impact M&A of the China
launch the latest processes for molecule synthesis. agrochemical industry to achieve more market
The growing capacity of big manufacturers will competitiveness. For global end users, China will
bring more pressure on medium and small-scale also develop sustainable formulations for farmers
producers with expectations they will not be able to face the challenges on climate change and
to compete. Scaling up can minimize the cost of impact from the pandemic. The novel sustainable
production, and maximize the net margin of profit. formulation, such as CS, OD, DF, and DF, will become
By controlling natural resources and upstream instrumental in providing sustainable solutions for
supply, the Chinese agrochemical industry will be farmers around the world. Moreover, the drone
reshaped and oriented to innovation. Medium (UAS) delivery of crop protection products with
manufacturers can survive only by differentiation digital farming is becoming more widespread and
of their portfolios. In March 2021, China’s Assets will provide options for farmers to achieve the goal
Supervision and Administration Commission of of carbon neutralization. These national trends will
State Council (SASAC) officially announced the surely impact the sourcing strategy from China.
merger and reorganization of SinoChem and The dynamics between supply and demand will
ChemChina. It is the first M&A case for the Chinese always drive the industry’s development. For
chemical industry, in which agrochemical is sourcing from China, the agrochemical leader’s
only one part of their business. It will impact the infrastructure decides the success of supply chain
China agrochemicals industry profoundly since management. Some large, well-funded companies
the industry resource allocation will be reshaped. might not be suitable for the sourcing strategy
The upstream resources allocation will push perfectly. Some bright shining company may have
the downstream manufacturers to re-arrange deep risk even though they are publicly traded.
the investment in portfolio development. The Currently, the high production/price-based model
merger will also have slow and indirect influence still dominates China, and the high inventory in
on the supply chains of the leading multinational the Chinese agrochemical market is driving prices
companies. China is aiming to control the rising weaker than manufacturers expected. Higher
capacity and focus on innovation. The key price trends could disturb the buyer’s purchasing
manufacturers will not only develop the production strategy. The pressure of high raw material prices
efficiency but also control the impurity with cost still exists, raising the cost of production while high
savings for generic active ingredients. On the inventories are starting to deflate prices for some
other hand, China manufacturers will also become AIs (Li, Reshape).
more competitive on active ingredients with recent
patent expirations. New capital entering this space Greenhouse Growth
has been focused on new patent expiries for many
years. Additionally, the industry is focused on By far the world's largest vegetable producer,
developing their own patented active ingredients, China has used greenhouses for decades, but
which is achievable by benchmarking the Japan food supply disruptions sparked by coronavirus
and Korea agrochemical companies. It will provide lockdowns in 2020 have accelerated the
more room for China manufacturers to have third- development of high-tech glass greenhouse
party alliances with multinational companies to facilities. To avoid future disruptions, municipal
supplement gaps in multinationals’ portfolios. The governments have said they aim to build up
CDMO (Contract Development and Manufacturing reserves of critical staples, and develop distribution
Organization) and the development of new, and logistics facilities. A growing affluent middle
patented AIs will progress in coming five years. By class, willing to pay more for higher quality food
innovating synthesis processes, Chinese companies
174
Agrochemical Industry will be able to expand the net margin of generic
AIs, enhance the yield of synthesis, and control key
The number of companies in the Chinese impurities. This will favor the larger companies, as
agrochemical industry will continue to decrease in China is expected to reach peak carbon emissions
the 14th FYP. New M&As will happen most probably by 2030 with a goal of carbon-neutrality by 2060.
among top 50 leading agrochemical companies in Only competitive manufacturers can contribute to
China. The big manufacturers will use their capital to this goal. So, the factor will impact M&A of the China
launch the latest processes for molecule synthesis. agrochemical industry to achieve more market
The growing capacity of big manufacturers will competitiveness. For global end users, China will
bring more pressure on medium and small-scale also develop sustainable formulations for farmers
producers with expectations they will not be able to face the challenges on climate change and
to compete. Scaling up can minimize the cost of impact from the pandemic. The novel sustainable
production, and maximize the net margin of profit. formulation, such as CS, OD, DF, and DF, will become
By controlling natural resources and upstream instrumental in providing sustainable solutions for
supply, the Chinese agrochemical industry will be farmers around the world. Moreover, the drone
reshaped and oriented to innovation. Medium (UAS) delivery of crop protection products with
manufacturers can survive only by differentiation digital farming is becoming more widespread and
of their portfolios. In March 2021, China’s Assets will provide options for farmers to achieve the goal
Supervision and Administration Commission of of carbon neutralization. These national trends will
State Council (SASAC) officially announced the surely impact the sourcing strategy from China.
merger and reorganization of SinoChem and The dynamics between supply and demand will
ChemChina. It is the first M&A case for the Chinese always drive the industry’s development. For
chemical industry, in which agrochemical is sourcing from China, the agrochemical leader’s
only one part of their business. It will impact the infrastructure decides the success of supply chain
China agrochemicals industry profoundly since management. Some large, well-funded companies
the industry resource allocation will be reshaped. might not be suitable for the sourcing strategy
The upstream resources allocation will push perfectly. Some bright shining company may have
the downstream manufacturers to re-arrange deep risk even though they are publicly traded.
the investment in portfolio development. The Currently, the high production/price-based model
merger will also have slow and indirect influence still dominates China, and the high inventory in
on the supply chains of the leading multinational the Chinese agrochemical market is driving prices
companies. China is aiming to control the rising weaker than manufacturers expected. Higher
capacity and focus on innovation. The key price trends could disturb the buyer’s purchasing
manufacturers will not only develop the production strategy. The pressure of high raw material prices
efficiency but also control the impurity with cost still exists, raising the cost of production while high
savings for generic active ingredients. On the inventories are starting to deflate prices for some
other hand, China manufacturers will also become AIs (Li, Reshape).
more competitive on active ingredients with recent
patent expirations. New capital entering this space Greenhouse Growth
has been focused on new patent expiries for many
years. Additionally, the industry is focused on By far the world's largest vegetable producer,
developing their own patented active ingredients, China has used greenhouses for decades, but
which is achievable by benchmarking the Japan food supply disruptions sparked by coronavirus
and Korea agrochemical companies. It will provide lockdowns in 2020 have accelerated the
more room for China manufacturers to have third- development of high-tech glass greenhouse
party alliances with multinational companies to facilities. To avoid future disruptions, municipal
supplement gaps in multinationals’ portfolios. The governments have said they aim to build up
CDMO (Contract Development and Manufacturing reserves of critical staples, and develop distribution
Organization) and the development of new, and logistics facilities. A growing affluent middle
patented AIs will progress in coming five years. By class, willing to pay more for higher quality food
innovating synthesis processes, Chinese companies
174
