Under the new landscape and amid emerging challenges, how can we forge new competitive advantages for China’s agrochemical industry?

Release Date:

2019-09-06

　In recent years, amid the complex and evolving domestic and international landscape, China… Pesticide The industry has overcome numerous challenges, forged ahead with determination, and achieved commendable results.
　　In particular, since the beginning of 2019, the uncertainties stemming from U.S.-initiated trade frictions and disputes have severely hampered the global economic recovery and also posed challenges for the domestic… Pesticide The steady development of the industry has brought significant risks.
　　In addition, with the domestic economy experiencing both stability and change amid mounting downward pressure, new developments and emerging challenges in economic growth are also having a profound impact on China. Pesticide The industry continues to develop in a healthy and sustainable manner. Despite the fact that China… Pesticide The industry is confronting dual headwinds from both domestic and international sources, with particularly stringent safety and environmental regulations curtailing the normal resumption of production at many enterprises. However, in China… Pesticide However, the industry as a whole is trending positively, with earnings on the rise—particularly among those regarded as the backbone of the sector. Pesticide The performance of listed companies in 2018 and the first half of 2019 was also strong, indicating that we… Pesticide Over the past few years, the industry has demonstrated a healthy development trajectory through structural adjustments and natural selection, further underscoring its role as a sector that supports agriculture. Pesticide Its status is indispensable.
　　However, we should also clearly recognize that our country… Pesticide The industry’s future will be shaped by an increasingly complex environment, and a host of contradictions, issues, and challenges will continue to impede its steady and sustainable growth.
　　One
　　Our country Pesticide The Current Status and Issues of Industry Development
　　In recent years, China has… Pesticide The industry has achieved stable development, with economic performance steadily improving, and its scale has risen to the global forefront. Pesticide Leading the way. In terms of output, production exceeded 3 million tons in 2012 and reached 3.778 million tons four years later, in 2016, setting a new record. With the Ministry of Agriculture’s goal to achieve by 2020… Fertilizer 、 Pesticide The implementation of the “zero growth in consumption” policy, Pesticide Total output has been gradually declining, with 2017… Pesticide Total production declined to 2.941 million tonnes in 2018. Pesticide Total output declined again to 2.083 million tons, yet over the past decade, average annual growth rates in output, main business revenue, and industry profits remained at 6.8%, 23.7%, and 33.9%, respectively.
　　Through the aforementioned series of data, we are preparing to… Pesticide While taking pride in the strong performance of major countries and industries, we must also recognize the domestic situation. Pesticide The issues and shortcomings in industrial development, particularly as China enters a new era marked by supply-side structural reform and a transition from high-speed growth to high-quality development, China… Pesticide The industry has also revealed numerous long‑accumulated problems; for instance, increasingly stringent safety and environmental protection policies have left many small and medium‑sized enterprises grappling with the question of their future. The overall situation facing the sector has grown more severe, and the challenges it confronts are even more daunting. It can thus be argued that China… Pesticide The industry has entered a new phase and embarked on a new journey of development.
　　1. The development model of “low weight, poor quality” has led to Pesticide The business is unsustainable.
　　The challenges posed by the U.S.-China trade war and other external uncertainties, coupled with a slowdown in domestic economic growth, the rising demand for green agriculture and food safety upgrades, and the intensified implementation of the “two reductions” policy, have led to… Pesticide The industry’s strategy of “winning through volume and low‑quality growth” is no longer sustainable. The times are moving toward… Pesticide The industry is raising new issues, and the market is moving toward… Pesticide The industry is sending a signal; at present, Pesticide Overcapacity in the industry has become the biggest challenge to high-quality development, particularly due to the impact of both domestic and international economic conditions. Pesticide Usage has declined significantly, and demand for both agricultural and non‑agricultural pesticides has also softened due to a variety of factors. Meanwhile, infrastructure development in modern agritourism parks and high‑tech agricultural zones has been constrained by rising local government debt levels, leading to varying degrees of reduced investment. All of these developments have inevitably exerted an impact. Pesticide Market demand.
　　In addition, new concepts in agricultural development and major adjustments to the agricultural structure have also… Pesticide The market has had a certain impact, especially... Pesticide Following the industry’s entry into the new normal of the economy, structural imbalances have become even more pronounced. Consequently, Pesticide Whether enterprises can become fewer in number, higher in quality, and more profitable is key to transforming the “quantity‑over‑quality” development model. In the future, “reducing quantity while enhancing quality” will define both the direction and the essence of industry development.
　　2. Stringent safety and environmental policies have led to Pesticide Enterprises tread carefully.
　　In recent years, across the country Pesticide The conflict between industrial development and ecological conservation is intensifying, particularly following the Huifeng environmental incident, which has sparked widespread public outcry nationwide, triggering… Pesticide A major upheaval has shaken the industry, while environmental regulations have forced companies in the Lianyungang Guanyun and Guannan chemical parks to suspend operations for rectification. Since last year’s environmental crackdown, numerous small and medium-sized enterprises that failed to meet pollution‑control standards have been shuttered or gone out of business. According to statistics, in the Beijing–Tianjin–Hebei region alone, 167,000 small, scattered, and polluting firms have been brought into compliance.
　　 Pesticide The industry’s development is also constrained by increasingly stringent ecological and environmental policies. Under mounting pressure to comply with environmental regulations, many enterprises that fail to meet the required standards… Pesticide Enterprises, particularly small and medium-sized ones, have also been forced to suspend production or even declare bankruptcy. With the gradual introduction of environmental inspection policies, the “Regulations on the Work of Central Ecological and Environmental Protection Inspection” were issued this year, addressing… Pesticide Industry development has brought even greater impacts, leaving many enterprises facing unprecedented pressure and existential challenges.
　　Even more so Pesticide What has the industry feeling as if walking on thin ice is the stringent safety‑production regulatory policies and… Pesticide The unpredictability of production safety risks. Pesticide As an agrochemical product, it possesses the fundamental characteristics of the chemical industry, with production processes that mirror typical chemical‑industry operations—highly flammable and explosive, prone to occasional accidents, and inherently risky. Particularly following this year’s March 21 explosion at Jiangsu Xiangshui Tianjiayi Chemical Co., Ltd., the state has tightened its oversight of workplace safety, leading to… Pesticide Companies are experiencing unprecedented pressure to fulfill their responsibilities.
　　Increasingly stringent environmental protection and workplace safety regulations have directly constrained the production capacity of some enterprises. Many small and medium-sized firms that have failed to invest adequately in environmental compliance and safety management have either shut down or suspended operations for rectification, leading to a sharp decline in operating rates. In some regions, entire industrial parks have been closed, which in turn has triggered substantial price hikes for raw materials and finished products, further pushing many companies into financial distress—and even… Pesticide The entire industry value chain has been affected. Amid a broader slowdown in industry growth and increasingly stringent environmental, safety, and regulatory policies, Pesticide Where the industry is headed is a question that concerns many. Pesticide The pressing issues that enterprises need to consider and the challenges they face.
　　3. The issue of industry–university–research collaboration has become Pesticide The Key to Industry Innovation
　　Before the new patent law came into effect, the imitation of patented varieties became Pesticide A shortcut to rapid industrial development, but with the implementation of the new Patent Law, imitation was brought to an end, and Chinese researchers began to enter… Pesticide The journey of innovation can only be sustained through continuous innovation in our country. Pesticide It has become a consensus that this is the only path for enterprises to grow stronger and more competitive in the future. However, it must be recognized that in our country… Pesticide The driving force behind industrial innovation largely resides in universities and research institutes, whether it is… Pesticide National Engineering Research Center and National Pesticide The innovation centers are all anchored by their respective institutions: the former is primarily supported by Nankai University and the Shenyang Research Institute of Chemical Industry, while the latter relies on the city of Shanghai. Pesticide Research Institute, Jiangsu Pesticide Research institutes, including the Hunan Institute of Chemical Research and the Zhejiang Institute of Chemical Research, as well as institutions such as China Agricultural University, Guizhou University, Huazhong University of Science and Technology, and Huazhong Normal University, have collectively formed… Pesticide An important driving force of research.
　　In fact, some of us Pesticide Research institutes have, through restructuring, effectively ceased to exist in name and reality, which has had a significant impact on our country. Pesticide Innovative development has also brought certain challenges. Moreover, the translation of research findings from scientific institutions into actual productive forces faces numerous obstacles. Under the current evaluation system, universities and research institutes alike strive to publish in top-tier journals such as SCI, compete for funding from the National Natural Science Foundation, and undertake high‑profile, academically prestigious projects. However, enterprise‑oriented R&D initiatives with practical value are often scarce; even when some research outcomes closely align with corporate and market needs, they seldom translate into tangible applications that generate real economic benefits due to a variety of factors.
　　Everyone keeps talking about the need to integrate industry, academia, and research, but in practice, it’s all talk—little action—and putting it into practice is far from easy. Pesticide Industry–university–research collaborative innovation encompasses both process and technological innovation as well as application‑oriented innovation. Not only is it challenging, time‑consuming, and high‑risk, but scientific research itself is a complex, multidisciplinary systems engineering effort that demands substantial investments of time and resources, unfolding as a gradual, step‑by‑step process. Meanwhile, enterprises often adopt a short‑term, results‑driven approach to research investment. Consequently, the key question is whether we can effectively address the integration of industry, academia, and research and ensure the efficient translation of scientific and technological achievements into practical applications. Pesticide It is the key to achieving innovative development in the industry.
　　4. Multiple factors driving up costs have become Pesticide Pain points in industry development
　　In recent years, under the influence of various factors, Pesticide The various costs of the industry continue to rise. Factors such as labor, land, environmental protection, and finance have eroded the original low-cost advantage; excessively high costs not only drive up… Pesticide Prices have also squeezed corporate profits. Although… Pesticide Prices have risen, but the sharp increase in costs—driven by labor expenses, raw material prices, environmental regulations, and safety‑supervision investments—is proving even more burdensome for businesses. For example, a large enterprise in Shandong… Pesticide Labor costs for enterprises have risen sharply: positions with high physical demands now command a minimum monthly wage of 4,500 yuan, while skilled workers earn between 3,000 and 4,000 yuan per month. Given the substantial workforce required, this increase in labor expenses has eroded corporate profitability.
　　In addition, ecological development and green manufacturing have also driven up Pesticide The cost of the industry, fueled by high expenses, has led many… Pesticide Enterprises are facing unprecedented survival pressures, as annual costs for quality improvement, environmental protection, product marketing, and other areas continue to rise, leaving an increasing number of companies in dire straits.
　　
　　Two
　　How to build our country Pesticide New Advantages in Industry Development
　　In response to the aforementioned issues, and in light of the current domestic situation… Pesticide Given the current state of the industry and the development of enterprises, the author believes that China must build its capabilities by embracing intelligent technologies, green practices, and close collaboration among industry, academia, and research institutions. Pesticide New advantages for industrial development.
　　1. Building China through intelligentization Pesticide New advantages in industrial development, promoting China’s… Pesticide High-quality industrial development
　　Whether it’s enhancing product quality or reducing costs, both require a move toward high-end sophistication and intelligentization. Intelligentization touches every aspect, but the key lies in effectively integrating “two modernizations.” In the internet era… Pesticide Intelligent manufacturing of equipment and production automation are the prevailing trends, and the deep integration of industrialization and informatization will… Pesticide Enterprises are ushering in the intelligent era. In the past, they relied on labor-intensive development. Pesticide The old model is no longer viable, as the advantage of low labor costs has vanished and the demographic dividend has disappeared. It is imperative to rely on intelligent technologies and automated equipment to reduce costs, enhance technological capabilities, and improve product quality.
　　Currently, many Pesticide Faced with high costs, companies are all seeking solutions and proactively moving toward higher-end, smarter operations to improve quality and efficiency while reducing costs and boosting profits. A portion of them has already… Pesticide Enterprises have made significant progress in intelligence and automation.
　　For example, there is one in Shandong. Pesticide The company has boldly pursued high-end and intelligent manufacturing, investing over 6 million yuan in upgrading its traditional equipment. As a result, its production lines have been fully automated, and quality inspection and management have been智能化ized. What once required 100 workers in a single workshop can now be accomplished by just over 20 workers across two workshops. Internally, product handling and logistics have also been fully automated and智能化ized, with most of the company’s processes now operating at an automated and智能化ized level.
　　There are also some. Pesticide By integrating with the “Internet Plus” initiative and leveraging cutting-edge technologies, companies generate QR codes for product‑origin information, enabling customers to instantly trace the manufacturing source and verify product authenticity. At the same time, these QR codes facilitate product tracking. Each month, they harness big data to conduct market analysis and forecasting, perform after‑sales service assessments and gather customer feedback, and promptly address any issues to ensure product quality—thereby significantly boosting sales performance.
　　The author has observed that an increasing number of enterprises now recognize the advantages of intelligent manufacturing and automated production, which can effectively reduce labor requirements, lower labor costs, and enhance both technological processes and product quality. In addition, many… Pesticide Enterprises leverage “Internet Plus” to transform traditional industries. Pesticide In production, sales, and other stages, the establishment of an online sales service system has enhanced efficiency and reduced transaction costs. Moreover, China is rapidly advancing its 5G mobile‑internet infrastructure; accordingly, we must seize the opportunities presented by 5G commercialization to promote the integration of artificial intelligence with… Pesticide The integrated development of industries.
　　2. Building greenness through ecological approaches Pesticide Industry, promote Pesticide Sustainable development of the industry
　　Since the 18th National Congress of the Communist Party of China, the philosophy that “lucid waters and lush mountains are invaluable assets” has taken deep root, and green development has become the trend of our times. Green manufacturing is being leveraged to build a greener future. Pesticide Industrial advantages are Pesticide It is the only viable path for industrial development. In the current context of agricultural ecosystem degradation, tightening resource constraints, and severe soil and environmental pollution, Pesticide The industry must embrace the concept of ecological civilization, pursue a path of green development, and contribute to the advancement of agricultural ecological civilization.
　　First, vigorously pursue green research and development to make both products and R&D processes environmentally sustainable. For a company seeking to maintain its competitive edge in the future market, developing new, eco‑friendly, and sustainable products has become a critical factor. A green, high‑end… Pesticide Products, as long as they deliver strong results, remain highly sought after in the market—even at premium prices—both domestically and internationally. Pesticide The fundamental trends in industrial development. Efforts should be focused on green and efficient research and development. Pesticide Products, especially those that are highly efficient and low-risk Pesticide and organisms Pesticide R&D, such as outstanding green technologies whose patents are about to expire or have already expired. Pesticide Products are a company’s “treasure” and must be thoroughly explored.
　　Secondly, vigorously promote clean production to achieve… Pesticide Greening of the production process. Currently, in traditional… Pesticide During production, the extensive use of raw materials and high material consumption, coupled with substantial by-products, waste, and wastewater, have become the most significant constraints on its development. Practice has demonstrated that clean production, grounded in clean technologies, not only enhances resource efficiency, boosts productivity and economic returns, but also substantially reduces waste emissions, thereby markedly mitigating environmental pollution and its impacts. Consequently, effectively implementing clean production is essential for achieving… Pesticide A powerful means of greening the production process.
　　Finally, it is essential to foster a green consumption mindset and promote… Pesticide Greening the usage process. Pesticide Problems such as residues, phytotoxicity, and soil contamination arising from use have left the public with a negative perception that “the mere mention of pesticides sends shivers down one’s spine.” Therefore, in addition to the research, development, and production stages, it is equally important to promote environmentally friendly practices at the application stage. In… Pesticide During application, we should promote environmental protection, adhere to the principle of waste reduction, and vigorously implement precise and efficient pesticide application to minimize… Pesticide the application rate and the number of spray applications, and carry out effectively Pesticide Following the use of packaging materials in fields and at field edges, a system of extended producer responsibility should be established, stipulating that manufacturers or importers are not only responsible for the production and sale of their products but also for the collection, transportation, recycling, and landfill disposal of waste generated during production. This will foster a sense of responsibility for safeguarding the ecological environment and cultivate green, environmentally friendly awareness.
　　Only by greenifying these processes can we ensure that we… Pesticide Only by earning a strong reputation in society and gaining greater influence in market competition can enterprises reduce energy and resource consumption throughout their R&D, production, and use processes, thereby cutting pollutant and greenhouse gas emissions, lowering costs, enhancing economic and social benefits, and advancing China’s… Pesticide Sustainable industrial development. In addition, we must pursue a path of green pest management, which represents a major initiative to implement the principles of “public plant protection and green plant protection.” This involves adopting environmentally friendly measures—such as ecological control, biological control, physical control, and the judicious use of chemical pesticides—to manage harmful organisms. Green pest management for diseases and pests can promote safe agricultural production and reduce the use of chemical inputs. Pesticide Therefore, we must increase investment in research projects on green pest management and strengthen efforts to implement green control measures.
　　3. Integrate social innovation resources through industry–university–research collaboration to promote Pesticide Continuous innovation in the industry is driving China’s… Pesticide The industry has entered the era of Industry 4.0.
　　Our country Pesticide Building on China’s national conditions and resource endowments, the industry has broken free from conventional constraints, developed numerous original scientific and technological achievements, and established a comprehensive industrial system integrating design, research, equipment manufacturing, production, and sales. At present, China has independently researched and registered new… Pesticide There are 47 varieties, including a number of products with proprietary intellectual property rights, such as tetrachlorantraniliprole, cyfluthrin, thiazole zinc, and difluoro‑phosphonate. Pesticide The variety has been successfully scaled up for industrial production, generating cumulative sales revenue of RMB 910 million and being adopted across 78 million mu of farmland.
　　But it is necessary to recognize that in our country Pesticide Compared with foreign countries, there is still a considerable gap in innovation. The innovative varieties are… Pesticide Key to industry development, such as during the period from 1980 to 2005, the six major companies—Syngenta, Bayer, BASF, Dow AgroSciences, Monsanto, and DuPont— Pesticide The company has launched a total of Pesticide 220 new varieties, accounting for the global total. Pesticide Seventy percent of new varieties; in 2011, these six companies filed a total of 904 patent applications, accounting for 75.5% of the year’s overall patent filings. The reason these six multinational corporations dominate the global… Pesticide More than 60% of the market share is attributable to these companies’ years of innovative R&D, which has established “intellectual property rights.” Pesticide ?Substantial profits? R&D investment? New property rights Pesticide a virtuous cycle, which serves as a cautionary tale for our country. Pesticide Enterprises must attach great importance to it. Pesticide The development of new varieties continues to see increased investment in R&D.
　　Despite our country Pesticide Technological innovation in the industry has also undergone significant changes, yet the bottleneck persists in the tripartite collaboration among industry, academia, and research institutions. Specifically, effective integration remains elusive: many research outcomes either fail to meet market demands and end up gathering dust, or remain technically immature and difficult to implement in actual production, or else see cooperation break down during technology transfer due to various factors. Pesticide The primary reason why industry–university–research collaboration remains challenging is the lack of strong incentives and institutional mechanisms for close cooperation among the stakeholders, as well as insufficient channels and linkages for collaboration. Moreover, there is a dearth of market‑oriented, professional, and socially integrated systems for technology transfer and innovation, coupled with inadequate government organization and coordination.
　　The solution lies in vigorously advancing institutional innovation centered on market-oriented reforms, overhauling the current performance‑evaluation mechanisms of research institutes, and, with strong support from governments at all levels, establishing a market‑driven technological innovation system that places enterprises at its core and integrates industry, academia, and research. In addition, manufacturing firms should strengthen collaborative partnerships with research and educational institutions, accelerate scientific and technological innovation and the commercialization of research outcomes, and robustly develop industry–university–research collaborative innovation alliances, thereby leveraging institutional innovation to advance China’s… Pesticide Technological innovation in the industry.
　　At present, in our country Pesticide Revolutionary breakthroughs in industrial process technologies and equipment are imminent, and a steady stream of original inventions with independent intellectual property rights is emerging from numerous enterprises and research institutes, marking that China… Pesticide The breakthroughs achieved in industrial technological innovation and the advent of an era of independently developed technologies and products mean that, by steadfastly pursuing institutional and mechanism reforms and effectively fostering collaboration among industry, academia, and research, we can propel China’s… Pesticide High-quality industrial development is promoting China’s transition from… Pesticide The transformation of a major power into a great power.
　　In short, Pesticide The development of the industry must adapt to domestic and international economic conditions, market dynamics, and the demands of modern agricultural advancement. Centered on smart and green practices, it should leverage industry–university–research collaboration to drive technological innovation, refine production processes, develop new varieties and product lines, and enhance product quality. By intensifying energy conservation and emissions reduction efforts, the industry can optimize its supply chain and accelerate the transition from a growth model focused on scale expansion to one that prioritizes variety, quality, profitability, and ecological sustainability in modern agriculture. Pesticide The industry is undergoing a transformation, shifting from low‑quality, extensive development to high‑quality, green development. Only in this way can the domestic… Pesticide Only through such endeavors can we achieve a phoenix-like rebirth from the flames, and only then can our country transform from… Pesticide The leap from a major power to a strong power!
　　Note: The data in this article are sourced from the National Bureau of Statistics and China. Pesticide Historical data publicly released by industry associations and other entities.