On 21 Oct. 2013, the local government of Liyang City, Jiangsu Province announced on its official website the results of environmental impact assessment on the production projects of Jiangsu Ogo Biotech Co., Ltd. (Jiangsu Ogo). According to the results, Jiangsu Ogo invested about USD14.22 million in the establishment of production projects of its functional oligosaccharides, including a galacto-oligosaccharide (GOS) project with 1,000t/a capacity; fructo-oligosaccharide (FOS), 1,000t/a capacity; isomalto-oligosaccharide (IMO), 2,000t/a capacity; and other products, according to Sweeteners China News 1311 issued by CCM in November.
In fact, Jiangsu Ogo is previously an industrial enzyme producer engaging in production of specific enzymes for GOS, FOS and IMO. Having served as a raw material provider for domestic functional oligosaccharides, Jiangsu Ogo is easier to adapt to the new role than other new entrants.
However, any new entrants including Jiangsu Ogo will have to face some challenges.
First of all, how to sell the products soon after the completion of its production projects will be a problem. The company will deal with customers from two different industries: functional oligosaccharide producers and functional oligosaccharide users. Whether the company can establish a successful sales channel will determines its development.
Secondly, Jiangsu Ogo has rich experience in the production and application of the specific enzyme for GOS, FOS and IMO, but little experience in the production of GOS, FOS and IMO. A certain number of talents for manufacturing processes will be needed, but the recruitment of these talents will be difficult to fulfill in a short time.
Jiangsu Ogo feels confident in the development of domestic functional oligosaccharide industry. Due to the healthcare benefits of functional oligosaccharides and the growing health consciousness of the Chinese public, domestic functional oligosaccharide industry has experienced a rapid expansion in the last two years. Quantum Hi-Tech (China) Biological Co., Ltd. (QHT), a leading functional oligosaccharide producer in China, is typical of this trend. The sales revenue of FOS and GOS of the company increased sharply from USD14.40 million and USD1.20 million in 2010 to USD21.89 million and USD5.45 million in 2012.
However, the actual consumption of functional oligosaccharides in China in the future may not be as optimistic as Jiangsu Ogo expects. At present, the domestic dairy, healthcare and feed industries are three main downstream industries for domestic functional oligosaccharide industry, and few other industries have added functional oligosaccharide into their products. High concentration of downstream industries limits the consumption increase of functional oligosaccharides in China.
At the same time, the current situation of the three main downstream industries above ahs also brought obstacles to the development of the domestic functional oligosaccharides industry. First of all, many functional oligosaccharide producers complained that the consumption of their products in the domestic dairy industry is likely to decrease because of the frequent dairy safety incidents. Secondly, healthcare product producers add functional oligosaccharide into high-end healthcare products only, which limits the consumption of functional oligosaccharide. Moreover, though domestic functional oligosaccharide producers has focused more on exploring the feed industry, the current consumption of functional oligosaccharides in this field is still at a low level.
Table of contents of Sweeteners China News 1311:
Opportunities and challenges coexist in domestic HIS industry
Baolingbao engaged in investments in banks' wealth management products since June 2013
Jiangsu Ogo to make debut in domestic functional oligosaccharide industry
Suzhou Gaofeng establishing new production line of HFCS and maltose syrup for Coca-Cola
Domestic corn prices predicted to decline slightly in 2013/2014
Export overview of some sweeteners and raw materials in China, September 2013
China's xylitol export in Jan. -July 2013: quantity increases sharply while price continues to decline
Export volume of China's syrup sorbitol increases sharply in May-July 2013
Export volume of China's erythritol decreases by 37% YoY in Jan. -Aug. 2013
China's import quota for sucrose to remain 1.945 million tonnes in 2014
Ex-factory prices of sweeteners in China in October 2013
Ex-factory price of China's FOS shows downtrend in Jan. -Sept. 2013
Price trend for China's maltose syrup in first three quarters of 2013
Baolingbao obtains patent certificate in Oct. 2013
Shandong Longlive signs cooperative agreement with UFRJ
Two Chinese leading sucrose producers suffer huge loss in first nine months of 2013
Orders for stevia sweetener met by Guilin Layn decreases sharply in first nine months of 2013
Sweeteners China News, issued by CCM on 5th every month, offers timely update and close follow-up of market and company dynamics based on China’s sweeteners industry. It also releases the latest information on raw material supply, price update, import & export analysis as well as consumption trend & competitiveness.
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