CCM: How could pesticide enterprises move forward in market downturn in 2015 02-25-2016

Some pesticide enterprises encountered different declines in both their revenue and profits in 2015, while some were against the market trend and improved in their performance through restructuring products and expanding the agrochemical service.


Source: Internet


The year 2015 was a hard year for China's pesticide industry because of the economic downturn, the declined grain price, the weak demand, the rising costs, the sliding price, the slow growth in exports and the mounting safety and environmental pressure. As a result, the entire profits in the industry were unsatisfactory. Some pesticide enterprises encountered different declines in both their revenue and profits in 2015, while some of them made improvement in their performance through restructuring products and expanding the agrochemical service. So how could these pesticide enterprises advance in this stagnancy?


Pesticide enterprises adjusted their product structures and enhanced core competitiveness.


Hunan Dongyong Chemical Co., Ltd. (Hunan Dongyong) is a dark horse bobbing up in the pesticide industry, whose revenue realized substantial growth in years 2013-2015. In 2015, the revenue reached USD18.31 million (RMB120 million), up 50% over the same period of 2014. The figure in 2014 also recorded a YoY growth of 60%. Zhang Jianhua, general manager of Hunan Dongyong, disclosed that the company's rapid development benefited from the resolution and efforts made in product structure adjustment. In 2015, Hunan Dongyong implemented strategies to transform and restructure itself. It stopped producing and selling the low-profit products and successfully jumped out of the trap full of homogenized products and vicious competitions. The company focused on the high-end and competitive products with high efficiency, low risk and strong personalization and these products were popular with the market. Besides, Hunan Dongyong made full use of modern technologies, such as the Internet of things, big data and mobile Internet, and provided customized service for characteristic products to mostly meet clients' requirements. 


Through adjusting its product structure and shortening the competition line in the market, Shanghai Vegcides Bio Chemical (Nanchang) Co., Ltd. (Vegcides Bio-chem) witnessed a big growth in its revenue in 2015, which is more than 30% higher than that in 2014. Wu Tong, general manager of Vegcides Bio-chem, said that the company has made some breakthroughs when it transformed the development from quantity-oriented expansion into quality-oriented benefits. On one hand, the company concentrates on producing and popularizing its core product - brassinolide. It shaped a long industrial chain from technical to formulations, branded the technical and serialized formations to enlarge the technological advantage in brassinolide and made it a competitive product in the industry. On the other hand, Vegcides Bio-chem marketed its products in less developed areas and joined hands with dealers to strengthen the terminal service. Also, the company and dealers allied as a community to generalize products and achieved win-win cooperation. In 2015, Vegcides Bio-chem's brassinolide products evoked a great repercussion in the market, outshining other products.




Pesticide enterprises extended the industrial chain and the agrochemical service became the source of profit growth. 


In 2015, the profit growth of Hunan Wanjiafeng Technology Co., Ltd. (Hunan Wanjiafeng) was up by 50% year on year, of which 80% were from the agrochemical service. Huang Anhui, general manager of Hunan Wanjiafeng, disclosed that pesticide producers need to shape a long service chain covering the whole process of production to enhance their ability against risks and to improve their profitability. Only when a company provides a full service involving seeding to harvesting can it work out farmers' radical problems. It is known that Hunan Wanjiafeng established a specialized organization serving for preventing and controlling the plant diseases and insect pests. In 2015, the service covered an area of over 333,330 ha (500,000 mu), creating a profit of more than USD760,000 (RMB5 million) for Hunan Wanjiafeng. 


That Hunan Province established a specialized organization serving for preventing and controlling the plant diseases and insect pests became a big highlight of greatest concerns in the agrochemical industry in 2015. Tang Huilian, assistant station master of the Plant Protection and Quarantine Station of Hunan Province, pointed out that as the competition in the agricultural market is increasingly intensified and farmers' demand is constantly changing, both producers for agricultural materials and new entities engaged in agriculture businesses have to face new choices. The agricultural material industry is in need of extending the industrial chain. New-type agricultural businesses require jointing their production and demand so as to deepen the integration of seeds, chemical fertilizers, pesticides and machinery. Now it has been an irresistible trend. Only through renovating the service system and updating the services could enterprises resolve the existing conflicts, break the bottleneck blocking the way to development and harvest the win-win results.


Pesticide enterprises offered crop solutions and successfully renovated the service pattern. 


In 2015, under the unfavorable situation where the prices of agricultural products dropped down steadily and the pesticide price kept climbing down, Shaanxi Norsyn Crop Science and Technology Co., Ltd. (Shaanxi Norsyn) is still wholehearted to customize practical crop solutions for farmers throughout the overall farming process. The company has achieved outstanding performance by integrating crops with technologies, generalizing flexible services and sharing benefits. As a result, the sales volume of its products grew steadily and the sales value increased more than 10%.  


Sino-Agri Leading Biosciences Co., Ltd. (Sino-Agri Leading) publicized its prospectus, saying that the funds raised in this stock issuing with issue expenses deducted will be completely used in operating and serving pesticide distribution. The company will invest USD106.81 million (RMB700 million) to carry out this project, aiming to innovate its service pattern, expand its services, draw up and promote solutions for crops in a scientific and practical way so as to present China's strong strength in the distribution service for pesticide industry. As the gross margin of the business of distribution service in the pesticide industry is fairly low, one of the efficient ways for enterprises to achieve sustainable development is to conduct businesses in a large scale. However, it calls for a large amount of operating funds to expand the sales and service channels. Meanwhile, a great number of operating funds will be employed to stock products for sales. What's worse, the inventory will hold up the working capital for a longer time when the off-season commercial reserve system meets the peak selling period.


Qingdao Hailir Pesticides and Chemicals Group come up with three major transformations in its thinking mode and innovates its services to develop itself. The first is that the enterprise made a switch from focusing on major farmers to focusing on major farmers' appeal for increments in both production and incomes. The second is that the company changed its view on products as crop set meals, providing major farmers with local crop solutions. The third is that the company achieves the shift of thoughts from the simple trades to service, materializing the value of the solutions through the specialized service.




About CCM:

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta. CCM is a brand of Kcomber Inc.


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Tag: pesticide

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