Current Status of China’s Pesticide Industry: Too Low in Technological Content

Release Date:

2018-05-18

Innovation capacity in science and technology is weak, and the level of technical equipment remains low. The pesticide portfolio is still dominated by generic products, with the vast majority of companies allocating less than 1% of their sales revenue to R&D; green and environmentally friendly products are scarce, and highly toxic, persistent pesticides still account for a significant share and have yet to be phased out. Sui Pengfei, Director of the Pesticide Inspection Institute of the Ministry of Agriculture, stated that, in addition to the large number of enterprises and the widespread issues of small scale, fragmentation, and disorder, redundant product registrations and extremely fierce homogeneous competition also constitute major bottlenecks hindering the development of China’s pesticide industry. According to China’s pesticide registration data from 2014, the number of registered pesticide products has remained above 3,000 over the past two years, with 3,374 products registered in 2014.

　　Technological innovation capacity is weak, and the level of technological equipment is low. Pesticide The product portfolio remains dominated by generic formulations, with the vast majority of companies allocating less than 1% of their sales revenue to R&D. Green and environmentally friendly products are scarce, and highly toxic, persistent‑residue‑bearing formulations are prevalent. Pesticide They account for a certain proportion and have yet to be phased out, among other issues.
　　Ministry of Agriculture Pesticide Sui Pengfei, director of the Inspection Institute, stated that, in addition to the large number of enterprises and the serious problems of small scale, fragmentation, and disorder, the redundant registration of products and extremely fierce homogeneous competition also pose significant constraints on China. Pesticide Bottlenecks in industrial development. According to the 2014 Chinese… Pesticide Registration data, in China over the past two years Pesticide The number of registered products has remained above 3,000, with 3,374 products registered in 2014—down by only 1.6% from the previous year.
　　In response to this market structure, the Plan proposes encouraging mergers and reorganizations as well as shareholding system reforms to enhance industry concentration and phase out outdated production capacity. By 2015, the top 20 enterprises… Pesticide The production volume of technical-grade active ingredients by manufacturing enterprises accounts for more than 50% of the total output; the product mix is being adjusted to prioritize the development of highly effective, safe, and environmentally friendly insecticides and herbicides, ensuring that these account for over 50% of total production, while reducing the share of highly toxic and persistent‑residue‑producing formulations from 5% to below 3%, among other measures.
　　In addition, the various detailed policies formulated by local authorities in alignment with the new Environmental Protection Law, which came into effect on January 1 this year, have also resulted in… Pesticide The industry has been severely affected. On the one hand, these policies require… Pesticide Manufacturing firms have increased their environmental‑protection investments, thereby raising production costs; at the same time, this has accelerated the elimination of small, outdated enterprises that fail to meet environmental standards. At present, this “double-edged sword” effect is already becoming apparent.
　　According to incomplete statistics, domestically… Pesticide There are 20 major listed companies. Compared with 2013, among these 20 listed firms, 10 reported a decline in total operating revenue last year, and 7 posted negative growth in net profit; notably, Beihai Guofa (600538, SH) and (002513.SZ) saw their net profits plunge by more than 100%.
　　Zhu Qinghua, Director of Corporate Affairs for Syngenta China, stated that domestically… Pesticide The industry must undergo further rigorous consolidation, as ongoing restructuring reshapes the landscape. Many companies are already in the midst of transformation, shifting toward the production of more efficient and environmentally friendly products—efforts that hinge on technological innovation.
　　Internationally Pesticide Market competition is fierce, with international giants such as Syngenta, Monsanto, DuPont, and Bayer… Pesticide The company allocates approximately 10% of its annual sales revenue to research and development. In contrast, the Plan notes that in China, the vast majority of enterprises devote less than 1% of their sales revenue to R&D, with weak basic research and insufficient momentum for developing new products. The Plan calls for, by 2015, large and technology‑oriented enterprises to… Pesticide The proportion of corporate R&D expenditure to sales revenue has reached 5% or more. Pesticide R&D spending across the entire industry accounts for more than 2% of sales revenue.