China’s Unique Path: Upgrading the Agrochemical Industry for a New Era of Global Sourcing
1 December 2025 As market volatility and global competition continue to reshape agriculture, sourcing strategies are under more scrutiny than ever. At the 2025 AgriBusiness Global Trade Summit, industry expert David Li offered a forward-looking assessment of China’s agrochemical sector in his session, “China’s Unique Path: Upgrading the Agrochemical Industry.”
Drawing on decades of experience in global sourcing and supply chain consulting, Li explored how China’s industry is evolving under economic pressure, regulatory change, and shifting international demand — and how buyers can adapt to new realities in one of the world’s most critical production hubs.
Adjusting to Structural Shifts
According to Li, China’s agrochemical sector is undergoing a profound structural adjustment. “Commodity prices have been extremely low across the globe,” he explained. “That’s created challenges not only in China, but also in the U.S. and Latin America.”
Falling prices for key actives like glyphosate have forced Chinese manufacturers to reevaluate production and investment strategies. However, Li noted that these pressures are driving efficiency.
“Many producers are running at low operating rates, and as demand returns, we expect sourcing strategies to shift from just-in-time buying to longer-term contracts that stabilize pricing and ensure supply security,” he said.
This recalibration is helping China’s industry find a new balance between supply and demand. While export volumes remain strong, pricing has moderated, and 2025 is already showing signs of recovery for several key actives and intermediates.
Policy, Consolidation, and Capacity Control
Government policy is also steering the industry’s transformation. China’s National Development and Reform Commission has introduced measures to curb excessive capacity and prioritize sustainable growth. “The central government is now focused on controlling new capacity,” Li said. “That means existing facilities — and the companies that operate them—are becoming even more valuable.”
The result is a wave of consolidation and technological upgrading. Chinese producers are investing in new-generation chemistries, including second-generation diamide insecticides, PPO-inhibiting herbicides, and SDHI fungicides. These segments, Li observed, are emerging as hot spots for both domestic and global markets.
With low global prices and increased regulatory scrutiny, investment decisions have become more cautious. Buyers, Li advised, should carefully evaluate whether potential partners control their own intermediates and raw materials.
“Companies with upstream integration can save 5%-10% in costs and provide more stable long-term supply,” he said.
China’s Evolving Global Role
As multinational firms adapt their sourcing strategies, China remains a cornerstone of global agrochemical supply. “For many multinationals, China has become a top priority,” Li explained. “They need cost efficiency and supply consistency — and China offers both.”
While India continues to grow as an alternative, both countries face challenges from tariffs and trade policy shifts. Yet Li believes diversification no longer means moving away from China — it means expanding with it. “We used to talk about a ‘China Plus One’ strategy,” he said. “But now it’s ‘China Plus N.’ Many Chinese manufacturers are investing overseas, building formulation and production facilities in countries like Malaysia and across Latin America.”
This global expansion is being matched by a new emphasis on quality and brand reputation. “In the end market, you only get one shot,” Li said. “If there’s a problem in the field, you lose the farmer’s trust. That’s why Chinese suppliers now see quality as their top priority.”
Chinese generics are already reshaping markets, replacing branded products in some categories with up to 80% market share. Despite geopolitical tensions and tariff fluctuations, China’s agrochemical producers are steadily gaining ground in global distribution networks.
Latin America and the Belt and Road Advantage
Latin America has emerged as one of the most competitive regions for Chinese suppliers — a “deep red sea” market, as Li described it. Yet, he sees tremendous opportunity for integration and investment.
China’s Belt and Road Initiative continues to strengthen agricultural trade routes, including infrastructure projects like new port developments in Peru designed to streamline soybean shipments from Brazil directly to Shanghai. “This kind of logistical connection enhances China’s long-term supply security and efficiency,” Li said.
Innovation and the Next Generation of Suppliers
China’s focus is no longer solely on production volume — it’s on innovation. Li highlighted partnerships between Chinese firms and global companies such as BASF, which are leveraging AI and advanced chemistry platforms to design new molecules. “It’s a good opportunity for Chinese innovators to test new technologies and apply them to agriculture,” he noted.
What’s particularly striking, Li said, is the rise of new entrants from other industries — pharmaceuticals, new materials, and biotech — bringing capital and expertise into agrochemicals.
“These companies are investing heavily, registering products globally, and building new partnerships,” he explained. “They’re reshaping China’s supply landscape.”
Chinese suppliers are also increasing collaboration with multinationals such as UPL and Syngenta Group China to meet global regulatory standards. As innovation accelerates, Li believes China will not only supply actives but also license technologies outward — a shift that could redefine its role in the global market.
Strategic Takeaways for Buyers
For international buyers and distributors, Li’s message was clear: success in sourcing from China depends on more than price. “You need to create your own internal system for evaluating suppliers,” he said. “Don’t just look at cost — look at resources, integration, and innovation capacity.”
He emphasized that China should be viewed as a strategic partner, not just a supplier. “China is a friend to global distributors,” Li concluded. “Competition will always exist, but the goal is to leverage China’s upstream resources as an advantage. Those who build smarter partnerships will be best positioned for the future.”
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