After
seeing declines in overseas sales of its main products, Guangxi Agrochemical
revealed to establish a subsidiary in Hong Kong to get a better foothold in
international markets.
Source: Pixabay
In
the beginning of June, Guangxin Agrochemical has revealed the plans to open a
wholly-owned subsidiary in the Hongkong Special Administrative Region. The
company will fund this investment only with own capital worth USD1 million.
The
enterprise is selling its products in foreign markets like the USA, Germany,
Denmark, Brazil, Argentine, Mexico, Japan, and South Korea, among others,
mainly with the help of trade companies or through self-support export. After
all, 70 percent of its products have been exported to Europe, the United
States, Southeast Asia, and other regions, according to the company. Key
products like carbendazim and thiophanate-methyl have good rankings in terms of
production and sales as well as foreign exchange earnings, according to market
intelligence firm CCM. The production and marketing scale, export volume and
volume of foreign exchange earned by the export of carbendazim and
thiophanate-methyl rank first in the same industry in China. Besides, the
production capacity of carbendazim ranks top in China and Guangxin Agrochemical
is one of the main manufacturers of glyphosate in China.
The
sales volume of Guangxin Agrochemical was declining constantly from 2012 to
2015 with a small rebound in 2016 again. However, the proportion of sales in
international markets as part of total sales dropped down from 2013 to 2016. To
be more detailed, the share in these 4 years fell down by about 50% totally.
Sales
Income of Guangxin Agrochemical in the international market, 2012-2016
Source:
Guangxin Agrochemical
This
trend is opposite to the domestic market, where sales witnessed a growth in
recent years with expanding the application of the key products. Another
challenge is the dependence by the enterprise on long-term clients in the
international markets, where changes of the key accounts are dangerous. Once
the clients lost or the settlement period extended, negative effects will be
inevitable. Hence, Guangxin Agrochemicals is in urgent need to develop the
overseas markets in order to not lose further share in those key areas. This
will grant a better development and benefit the sales scope of the company in
general.
With
the establishment of the new subsidiary, Guangxin Agrochemical is expected to
undergo a fast internationalisation process. It is worth noting, that opening
overseas market has been a beneficial choice for most pesticide enterprises in
China, which are facing an intensifying market competition domestically as well
as severe overcapacity in the industry. As a result, those enterprises transferred
some capacity through export in order to gain more profit.
What’s
more, Guangxin Agrochemical is also establishing a 3,000 tonnes per year
pyraclostrobin, and a 1,200 tonnes per year famoxadone project for a
technological upgrade and clean production of 15,000 tonnes per year
o-phenylenediamine, which will further support its development in the future.
About Guangxin
Agrochemical
Guangxin
Agrochemical is mainly engaged in R&D, production and sale of pesticide TC,
formulations and intermediates of fine chemicals, which is China’s key
pesticide producer. At present, major herbicides produced and sold by the
company are diuron, glyphosate, and hexazinone. It has two major production
plants in Guangde County and Xiangyu Chemical Industrial Park of Dongzhi County
respectively.
Guangxin
is under China’s top 30 pesticide sellers and ranks the 25th among pesticide
exporters.
About CCM
CCM
is the leading market intelligence provider for China’s agriculture, chemicals,
food & ingredients and life science markets.
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