Last year marked the beginning of China’s 11th Five-Year Plan, the central government’s written objectives and strategies for the upcoming half-decade. Right from the start, it was clear that the recently initiated Plan would be different from those of the past.
For one thing, the Five-Year Plan really isn’t a “plan” anymore; the Communist Party of China (CPC) changed the Chinese name in 2006, with the new word closer in meaning to “program” or “layout” than to “plan.”
The change was made to emphasize China’s new direction. The aims for the years 2006 to 2010 have the stated ambition of “putting people first” by scientifically establishing sustainable development; working towards environmental goals and lowering pollution; taking to heart China’s increasingly open market and the needs of its people; and “advancing the economic society’s and people’s all-round development,” according to the 3rd Plenary Session of the 16th CPC Central Committee. This is a marked change away from the material goals of the past, which focused primarily on economic growth.
This direction from China’s leadership has already impacted agribusiness in the country, as a number of programs are underway to clean up China’s ag-chem industry, as well as its reputation overseas. This effort to improve, organize, and modernize is taking many forms, touching on issues covering environmental regulations, intellectual property rights (IPR), chemical discovery, the removal of older chemistries, and the consolidation of the industry by helping to foster the growth of larger, well-run enterprises, sometimes at the expense of smaller or less efficient businesses.
就像中国的一切一样，当变化来临时，变化会很大。
重新聚焦生产
It may seem strange to think that an industry such as ag-chem production in China would require any changes in direction. In 2006, the country’s pesticide manufacturers produced a record-high volume of active ingredient (ai) with nearly 1.3 million tonnes, according to the China National Bureau of Statistics (NBS). This production is 20% higher than 2005 output.
But the effects of the 11th Five-Year Plan are felt in those numbers. As of the beginning of 2006, a dedicated effort was made through 29 government programs to eliminate and substitute newer products for five organophosphorus insecticides: methamidophos, monocrotophos, phosphamidon, methyl-parathion, and parathion. Prior to the onset of the programs, these five products combined to represent 27% of China’s total ag-chem output. In 2006, their production accounted for just 3%, according to the China Crop Protection Industry Association (CCPIA).
China’s world-leading pesticide output also featured more modern formulations in finished products, with the proportion of emulsion in water (EW), micro-emulsion (ME), suspension concentrate (SC), and water dispersible granule (WDG) formulations all rising, while older formulations such as emulsion concentrate (EC) and wettable powder (WP) decreased.
The country’s promotion of IPR and innovation also took steps towards becoming more of a reality. During the 10th Five-Year Plan (2001 to 2005), 24 pesticides with independent IPR were developed (seven insecticides, eight fungicides, eight herbicides, and a plant growth regulator), which was a big step in the right direction. In 2006, a novel fungicide (enestroburin, SYP-Z071) from Shenyang Research Institute of Chemical Industry; a novel insecticide (Fuxian, JS118) from Jiangsu Pesticide Research Institute Co., Ltd.; and a new insecticide (HNPC-A9908) from Hunan Research Institute of Chemical Industry all emerged from Chinese developers.
Further enhancing the Chinese industry’s modernization was another milestone in 2006: the establishment of the country’s first Good Laboratory Practice (GLP) certified research lab. Nutrichem Laboratory Co., Ltd. received the certification of compliance from the Belgian GLP Monitoring Authority in May; many more are likely to be joining it in the coming years.
在国内外
While pesticide production hit a new high, the trade balance in China shifted dramatically in 2006. Exports, which represented nearly 40% of China’s ag-chem output in 2005, represented 30.7% of the country’s output in 2006, with a measured decrease (7%) in export volume and a major decrease (29.8%) in export value. At the same time, the country imported 43,200 tonnes of pesticides (17.5% more than in 2005) worth US $212.7 million (16.5% higher than in 2005), according to the China General Administration of Customs.
在国内，2007 年的需求预计将与 2006 年持平。CCPIA 收集的省级报告显示，中国农民需要约 297,000 吨农药。主要产品（需求量超过万吨）为敌敌畏、乙草胺、硫酸铜、杀虫双、草甘膦。总的来说，杀虫剂和杀菌剂的需求预计将保持在或接近 2006 年的水平，而除草剂的需求可能增长 5% 多一点，达到 72,800 吨左右。
从地域上看，农药消费大省（消费量在2万吨到3万吨之间）分别是安徽、黑龙江、湖南和山东。下一层（消费量在 10,000 至 20,000 吨之间）由福建、广东、广西、河北、河南、湖北、江苏、江西、辽宁、云南和浙江等省份组成。
动态市场的市场动态
Along with steps to modernize the types of products being produced in the country, China’s producers are themselves consolidating to become larger, stronger entities. Perhaps the most notable of these was the acquisition of Heilonjiang Pesticide Co. by 中国化工农化股份有限公司 已经控制了沙隆达、大成和安邦，为中国成为跨国公司的主要竞争对手铺平了道路。
There still is room for further mergers among China’s top companies. In 2006, the Top 20 pesticide companies by sales combined to generate total sales of US $3.226 billion, or a relatively small 34.4% share of the country’s total sales volume.
几项政府事业正在支持行业更加整合的趋势。一方面，生产费用增加，使得小公司更难自行注册。自 7 月以来，制造商获得生产许可的成本已上升至技术制造商约 $390 万美元和配方商约 $130 万美元。
The company also is changing its approach to regulating production. As one manufacturer told FCI, “There are 300 to 500 ai manufacturers in China, and many more formulators. Production has not been strictly regulated; the government has often looked the other way.” However, that could be changing as several controls formerly held at the provincial level move to the central government’s hands. Among those, changes to environmental regulations and licensing top the list, both efforts by the government to create a “green process and clean production.”
实地已经感受到这些努力。
“There is more concern about the environmental system,” says Yang Zheng Yu, chairman of 浙江泰德作物科技有限公司. – A Division of Tide International. “To set up new ag-chem plants, you now need approval from the Central Environmental Bureau. So far, quite a lot of requests have come from the provinces, but only a few were approved. The central government wants to grow some companies that can compete in the global market.”
农化部经理邹卫平 浙江化工进出口总公司., agrees that the new regulations are likely to change the industry’s composition. “The environmental issue is creating a problem for all small manufacturers,” he says. “They need to invest in waste water management systems – that costs a lot. And they need to move to remote areas where there are already too many plants and too much competition.”
The licensing issue is another which could have the effect of driving the country’s many producers together. Tide’s Yang Zheng Yu explains: “China formerly had three types of registrations. One for life, one a primary registration for production, and one for the manufacturing of chemicals for export only. The government is cancelling the third type; you now have to prove your manufacturing is legal by government standards, and the government will check you out to see that you are legal.”
Of course, the remaining licenses are more difficult to attain than the license for exports only had been, and waste water management – which will be a requirement for all plants – are both moves that are expected to force more companies into mergers and acquisitions to clear the added hurdles.
对系统的冲击
尽管中国工业界仍存疑虑，但也有望有所改善。
林安金，总经理 阳光国际营销有限公司., says that “the Chinese market could be a good market,” and thinks that consolidation could lead to a brighter future. “When the factories compete, the price falls, both here and internationally. Already, Ukraine and Russia are difficult because many Chinese factories are competing for market share and have driven down prices there.”
The changes could also lead to a better reputation internationally, if the successful businesses hold themselves to higher standards. Tide’s Yang Zheng Yu says that there are still areas where Chinese business needs to get up to speed.
“Payment remains a problem in China,” he says. “We insist on payment in advance; I prefer to make sales of $10 million I will get vs. $100 million I will never see.”He adds that there still is a lack of expertise – or worse, an outright disregard – for IPR in the country.
“People don’t pay a lot of attention to the patent issue at times,” he explains. “For example, for a certain herbicide, there is no patent protection. But for a safener that is used with it, there is – if you use the safener, you need to pay for it. Yet lots of formulators still don’t; they do black market formulations. If there’s money in it, they’re willing to take the risk.”
In the past, that has meant risky business for overseas partners. “We are feeling the effects of increased regulatory pressure during our contract supply negotiations for our US and European customers,” says Michael Feinman, president of 乙酰农用化学品公司， a subsidiary of Aceto Corp. that sources pharmaceutical and ag intermediates and speciality fine chemicals from 500 Chinese factories out of its Shanghai office. “It is very important to have local representation to ensure that Chinese factories are in a position both technically and financially to comply with the new regulations. When millions of dollars are invested to secure a US registration for a post-patent seasonal product, we cannot afford to have a supply problem.”
A consolidated industry would create more trust among international partners – a necessary ingredient for good business, Yang Zheng Yu says, and points to an example of a problem that the Chinese strategies are hoping to eradicate. “One customer sent us a copy of a registration number and manufacturer name they were given by a manufacturer; it was all fake. The registration number was non-existent.”
他接着说，政府迅速打击违规公司，将其列入黑名单，并剥夺其拥有的所有注册和证书。
There have been several stories like this one described by different manufacturers, such as one in which a foreign company came to China to visit the office of a manufacturer which claimed to have sales of US $100 million per year. The foreign company arrived at the manufacturer’s office to find it consisted of one room with three tables.
Stories like these led Yang Zheng Yu to his opinion of what the final shake-out will be once in China, and what it will take for companies to survive. “You need to have quality. Everything is moving towards more quality – personal quality and product quality.”