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NA BRIEFING South China Business Journal
Planting for the Future:
Investing in China’s Crop Seed Industry
By: Steven Elsinga
As any visitor to the country is supply side the market is fragmented business license with the Administration
quick to notice, China is a land of into over 5000 small players. For foreign of Industry and Commerce, or request
foodies. It is common practice in China companies looking to break into the to have their present business license
to knowingly prepare or order too much Chinese market, some of these would amended.
food for friends and guests. Food is make for interesting take-over targets.
intentionally wasted as a way for hosts to In addition to a production or trading
signal that they will not let their guests go Possibilities for Foreign license, companies that import or export
hungry. So much food is being wasted, in Investment seeds need a seed import/export license
fact, that the government has launched a as well. This is regardless of whether the
campaign to discourage the practice. Given the food safety concerns at stake, seeds are classified as ‘major crops’. The
crop seeds are a politically sensitive State Council regulates the importation
And for good reason. With 22 percent of matter. As such, the production of new of genetically modified seed specimens
the world’s population, China only holds varieties of crop seeds remains one of the separately.
10 percent of the planet’s arable land. few industries where foreign investors
Measures from the Chinese government need to have a Chinese joint venture Imported seeds need to meet China’s
to combat the issue range from buying partner in order to invest. Approval national and industry standards,
up arable land abroad to researching new is required as well for the collection otherwise they can only be used for
agriculture techniques. A key question of germplasms. Foreign ownership seed production. The domestic sale of
is how to grow more food with less land. of companies that engage in genetic seeds that don’t meet these standards is
This is where crop seeds come into play. modification is prohibited altogether. prohibited.
These restrictions have been maintained
The Chinese Crop Seed Market in both the 2015 version of the Catalogue New Draft Seed Law 2015
for the Guidance of Foreign Investment
With an estimated size of US$17 billion, and the more liberalized Negative List in In May 2015, the Chinese government
China is the largest crop seed market after use in the Free Trade Zones. released a draft of the new Seed Law for
the United States. Roughly 50 percent of public review. The proposed law makes
the market is held by foreign companies. Under the current Seed Law 2013, several major changes to the licensing
The state-owned companies that are separate licenses are required for seed system.
active in the market largely sell old production and seed trading of what are
varieties of specific vegetables, although termed ‘major seeds’. The five foremost For one, the production and trading
these have begun to develop new varieties major seeds are rice, corn, wheat, licenses are merged into one license,
in recent years. soybeans and cotton. In addition, the called the Seed Production and Trading
Ministry of Agriculture and its provincial License. This license only applies to the
Since the 1980s, Chinese research branches maintain a list of other crops five major crops mentioned above. The
institutes have begun to sell seed varieties that are also considered major seeds. list with additional major crops appears
to local farmers as well. More recently, to be abolished.
private seed companies have rapidly Companies that wish to engage in
started sprouting up. As such, from the seed trading need to receive the Seed The law does, however, introduce a
Trading License prior to applying for a registration requirement for non-major
4
Planting for the Future:
Investing in China’s Crop Seed Industry
By: Steven Elsinga
As any visitor to the country is supply side the market is fragmented business license with the Administration
quick to notice, China is a land of into over 5000 small players. For foreign of Industry and Commerce, or request
foodies. It is common practice in China companies looking to break into the to have their present business license
to knowingly prepare or order too much Chinese market, some of these would amended.
food for friends and guests. Food is make for interesting take-over targets.
intentionally wasted as a way for hosts to In addition to a production or trading
signal that they will not let their guests go Possibilities for Foreign license, companies that import or export
hungry. So much food is being wasted, in Investment seeds need a seed import/export license
fact, that the government has launched a as well. This is regardless of whether the
campaign to discourage the practice. Given the food safety concerns at stake, seeds are classified as ‘major crops’. The
crop seeds are a politically sensitive State Council regulates the importation
And for good reason. With 22 percent of matter. As such, the production of new of genetically modified seed specimens
the world’s population, China only holds varieties of crop seeds remains one of the separately.
10 percent of the planet’s arable land. few industries where foreign investors
Measures from the Chinese government need to have a Chinese joint venture Imported seeds need to meet China’s
to combat the issue range from buying partner in order to invest. Approval national and industry standards,
up arable land abroad to researching new is required as well for the collection otherwise they can only be used for
agriculture techniques. A key question of germplasms. Foreign ownership seed production. The domestic sale of
is how to grow more food with less land. of companies that engage in genetic seeds that don’t meet these standards is
This is where crop seeds come into play. modification is prohibited altogether. prohibited.
These restrictions have been maintained
The Chinese Crop Seed Market in both the 2015 version of the Catalogue New Draft Seed Law 2015
for the Guidance of Foreign Investment
With an estimated size of US$17 billion, and the more liberalized Negative List in In May 2015, the Chinese government
China is the largest crop seed market after use in the Free Trade Zones. released a draft of the new Seed Law for
the United States. Roughly 50 percent of public review. The proposed law makes
the market is held by foreign companies. Under the current Seed Law 2013, several major changes to the licensing
The state-owned companies that are separate licenses are required for seed system.
active in the market largely sell old production and seed trading of what are
varieties of specific vegetables, although termed ‘major seeds’. The five foremost For one, the production and trading
these have begun to develop new varieties major seeds are rice, corn, wheat, licenses are merged into one license,
in recent years. soybeans and cotton. In addition, the called the Seed Production and Trading
Ministry of Agriculture and its provincial License. This license only applies to the
Since the 1980s, Chinese research branches maintain a list of other crops five major crops mentioned above. The
institutes have begun to sell seed varieties that are also considered major seeds. list with additional major crops appears
to local farmers as well. More recently, to be abolished.
private seed companies have rapidly Companies that wish to engage in
started sprouting up. As such, from the seed trading need to receive the Seed The law does, however, introduce a
Trading License prior to applying for a registration requirement for non-major
4
