A new Chinese player in the international agrochemical market 06-20-2017

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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