CCM: Overseas market expansion models for Chinese seed enterprises 08-11-2016

According to the introduction from experts, seed trade and investment abroad are two methods for China’s seed industry going global at present. And seed trade is the main one. In addition, Chinese seed enterprises mainly use four models to expand overseas market. They are


  • domestic research and development - domestic seed production - foreign sales
  • domestic research and development - foreign seed production - foreign sales
  • foreign research and development - foreign seed production - foreign sales
  • domestic research and development - foreign seed production - domestic sales


                                         

Source: Baidu


1. Domestic research and development-domestic seed production-foreign sales


This is a principal model now. It is also a trade method used by most enterprises, such as Beijing Doneed Seeds Co., Ltd. and Winall Hi-Tech Seed Co., Ltd. However, the foreign seed production market hasn’t been developed in this model. 


2. Domestic research and development-foreign seed production-foreign sales


In this model, seed technology and variety advantages created and developed domestically by China are improved, optimized and promoted under foreign environment. Besides, the relatively inexpensive foreign resources for seed production are used. Therefore, China’s seed industry can reduce the costs of going global.


Currently, some enterprises are making such attempts like setting up a seed production base overseas. It is becoming a development trend for them to go global. Some companies have established breeding test stations abroad, such as Winall Hi-Tech Seed Co., Ltd., Sichuan Guohao Seed Co., Ltd., Hubei Provincial Seed Group Co., Ltd., Liaoning Dongya Seed Limited Company and Heilongjiang Nongken Keyuan Seed Limited Company. They cooperate with target countries to carry out scientific research, tests and demonstration of breeding. 




3. Foreign research and development-foreign seed production-foreign sales


This model is that China’s seed enterprises achieve their localisation overseas by merging and acquiring local companies and by directly investing to establish factories. Yuan Longping High-Tech Agriculture Co., Ltd. (Longping High-tech) is an example. It set up holding subsidiaries in Indonesia, the Philippines, etc.


They carry out experiments, demonstration and trial seed production of hybrid rice and hybrid corn. “Localisation” operations are also conducted. In addition, Longping High-tech succeeded in planting demonstration of hybrid rice in Brazil, Indonesia, East Timor, etc.


At present, its market share in Pakistan has increased substantially. Its markets in countries such as Bengal, the Philippines and Indonesia are further consolidated. Besides, Longping High-tech established an international resource collection library for hybrid corn.


An ILROCKFORD breeding station was also founded in the US. Furthermore, it signed a ten-year agreement with Illinois Foundation Seeds Inc. and invested USD10 million to introduce germplasm resources. Projects such as Canadian breeding station and South American breeding station are under preparing for construction.


Chongqing Zhongyi Seed Co., Ltd. set up four companies in Laos, Bangladesh, Myanmar and Vietnam. There are some companies establishing one company overseas, including Beijing Kings Nower Seed S&T Co., Ltd. in the US, Shandong Guanfeng Seed Science and Technology Co., Ltd. in Brazil, Henan Jingyan Yinhai Seed Co., Ltd. in Tajikistan, Sichuan Southwest Kelian Seed Industry Co., Ltd. in India, and Guangxi Wanchuan Seed Co., Ltd., Sichuan Ludan Seed Co., Ltd. and Sichuan Xike Seed Co., Ltd. in Vietnam. 


4. Domestic research and development-foreign seed production-domestic sales


This model is just a trend, primarily because target countries restrict sales of Chinese seeds in their markets due to various reasons. Meanwhile, the cost of domestic seed production is high, but it can be reduced by using this model.


As for seed trade, China’s total volume of seed imports and exports increased by 4.59 times in 14 years during 2000-2013. The average annual growth rate was 13.54%. The total exports increased from USD56.18 million to USD278.05 million. The number of seed export destination rises rapidly.


In addition to traditional ones in Southeast Asia, China’s seed enterprises are actively expanding some emerging markets such as Africa, South America and Central Asia as well as developed markets such as Europe and America.

 

This article comes from Seed China News 1607, CCM

 



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Tag: seed

 

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