China – a force to be reckoned with in the world of science
London, UK, April 22, 2011 - With Chinese agriculture employing over 300 million people and as the world’s largest wheat producer, there’s no doubting the significance of agriculture to both China and the global economy. And as the country develops at the forefront of global science and technology, the ripples and associated benefits are being felt across a wide range of industries, not least within crop protection.
Most visibly China’s growth is evidenced by a staggering 800,000 km of roads built in just 15 years, a world beating railway mileage hosting high speed rail networks and significant growth in the sale of automotives, computer technologies, mobile phones and textiles. Even in ship building, its YangShan Port is the world’s largest container port.
Such effective and rapid integration into the world economy is testimony to its increasing status in the global market. The territory is rated world number one as a foreign exchange reserve, number two for gross domestic product (GDP) and third in its international trade value.
In 2010, China’s imports and exports totalled a value of US$2972.76 billion, achieving a year-on-year growth of 34.7%. China’s exports reached US$1577.93 billion, while the import value totalled US$1394.83 billion, up by 31.3% and 38.7% respectively from the previous year.
Already in the first two months of 2011, the country’s imports and exports total US$495.83 billion, demonstrating a year-on-year growth of 28.3%. Broken down, China’s exports so far this year equate to US$247.47 billion with imports reaching US$248.36 billion, indicating trade is up by 21.3% and 36% respectively.
As a percentage of China’s GDP, agriculture contributes 13%, with the value of agricultural exports and imports alone contributing US$20.827 million and US$41.688 million respectively to the country overall, making China the third largest country of agricultural trade in the world in 2010.
Its figures in terms of the crop protection sector are no exception to the trend, being one of the biggest agrochemical consumers and a significant agrochemical exporter.
The domestic market for agrochemicals has reached US$3.2 billion, which together with India sits amongst the world’s largest agrochemical consumers, consuming a total 320,000 tonnes of AI domestically.
Top international companies in agricultural sales within China include the likes of Syngenta, Bayer, Dow AgroSciences, Monsanto, DuPont, BASF and Rotam within the top 10.
China’s strengthening market position in chemical production is illustrated by its pesticide export market reaching US$4.11 billion. The agrochemical export value for herbicides, insecticides and fungicides have remained significantly lower than competing countries despite an increase in the volume of shipments which is continuing to rise. The average price of agrochemical exports from China, the 5th largest exporter, is the lowest of the top 15 exporting countries, although equal with India in fungicides at US$4.1/kg.
China exports a total of 1,040,000 tonnes of AI and formulations – including 800,000 tonnes of AI, achieving volumes equal to USA and Brazil.
With the demand for agrochemicals, together with the expense and timeframe involved in bringing new products to market, there is an urgent need to invest in the research and development of new crop protection solutions, facilitating improvement and enhancement of existing chemistry. Yet, China has historically suffered a reputation for producing low cost, inferior or counterfeit materials, which in crop protection terms has delivered unreliable or ineffective product with dubious formulation quality and resulting issues such as tank mixing problems. But, that’s no longer representative of every business operating in the country and while lower quality manufacturing continues there is a growing presence of companies at the cutting edge of science and technology who are taking advantage of the benefits on offer.
The country’s particular strengths in chemical synthesis, associated technologies and technical supply has attracted significant attention and investment – enabling the provision of cost-effective, competitive and technical chemical production. To such a degree China has become a key supplier globally and presents an attractive market for both developed and developing countries including multinational companies, with crop protection being no exception.
For those modern crop protection companies prepared not only to invest in technology and new facilities but who are also committed to retaining high quality standards, China presents a huge opportunity for global growth with businesses such as Rotam emerging as global players and innovators as a result – which despite its relative youth in the market has already reached an impressive status.
Whilst having its origins as a Canadian business, its Chinese manufacturing base is key to Rotam’s business model. As relative newcomers to the world of crop protection their philosophy for producing high quality post-patent products has required heavy investment in regulation and R&D – factors that they see as key to building customer trust. Yet, operating in a competitive generics market, the market pricing structure doesn’t reflect the investment that Rotam claims to be equal to the investment of R&D companies that are delivering entirely new chemistry to the market, and who therefore charge a premium. In remaining price competitive with the generics market Rotam have therefore recognised the importance of keeping production costs low and have taken their manufacturing base to where the raw materials are readily available – China, Brazil, India – so they achieve competitive solutions and value for customers.
Yet, the East is delivering additional benefits. Compared with the western world, whose plants are now approaching 20, or even 30 years old; the emergence of some new high-tech crop protection plant facilities that employ state of the art kit with integrated laboratories and manufacturing facilities that are now up and running. For Rotam, this allows them to offer independent product registration capability and technical support, transferable on a worldwide scale.
Such abundant investment in new agrochemical plant facilities is now also being matched by ever tightening environmental controls as China increasingly aims to achieve quality and registration of agrochemical products on a par with the West. But quality is still variable and consumers must focus on the high quality producers.
This platform is delivering significant growth opportunities for Rotam with their regulatory performance proven in the major high-end regulatory markets for agrochemicals, including USA, EU and Brazil, with the granting of over 500 registrations globally and a further 230 currently in the pipeline.
They now rank ninth in the world for top off-patent global companies and in line with their commitment to top quality post patent chemistry, they anticipate rolling out a consistent level of new products year on year.
And as with other global businesses, Rotam have taken the advantage of the highly skilled Chinese professionals now emerging from International MBA programs that are training large numbers of officers and commercial elites in strategic thinking, overall planning, global vision, as well as practical management skills. In 10 years, the number of universities in China has doubled and the number of undergraduates has now reached 20 million per year, a level equivalent to the population of the State of New York.
It’s testimony to a culture being one of promoting a thirst to learn and global businesses are embracing them. Together with the purchasing power and access to raw materials, China offers a win-win solution for the crop protection firms seeking economies of scale, but who also wish to retain their quality standards. The result is market leading businesses that are equipped and able to maximise market opportunities for long-term development.
And they are receiving government backing. The Ministry of Agriculture (MOA) for China has reported the agricultural sector as witnessing increasingly closer ‘international co-operations.’ Their response is to offer up larger space for development and dramatically raising their international standing.
Standards must however keep pace and China’s continuing actions in promoting stewardship and anti-fake programs for their own agrochemical markets is seeing regulatory and safety measures raised. And with the Chinese Government’s emphasis on ‘environmentally sound’ technology and aims to curtail the production and use of highly-toxic pesticides, the proportion of exported and domestic products now meeting new global requirements has increased, with traits such as high performance, efficacy, low toxicity and improved safety characteristics becoming increasingly common. But, the elements of cheap, basic and poor quality pesticide outputs remain so traders must continue look carefully at products on offer.
Yet, with some quality formulations originating from within Chinese manufacturing bases the same firms are also developing innovative delivery mechanisms; systems promoting the removal impurities; and new surfactant systems; all enhanced by new packaging that promotes safe usage and application.
Tebuconazole is one example AI where the post-patent opportunities have been identified and exploited by Rotam. Having recognised crystallisation problems in certain formulations, improvements were made to achieve new generation products. The same has gone for formulation solubility in sulfonylurea chemistry that has been another key area of focus, with new products now improving product efficiency.
And while it’s early days, China’s development may follow a similar pattern to Japan and have a ‘high tech’ future. It may not have yet shaken off its ‘bucket and stick’ reputation, but to dismiss products originating from the region without further interrogation could be short sighted as world class, superior solutions from firms at the cutting edge of science, technology and manufacturing increasingly make China their home.