The trend of agrochemical companies investing in locations outside their home regions is pronounced: 73 firms have invested in 85 projects totaling RMB 57.4 billion.

Release Date:

2021-06-09

The 2021 China Agrochemical Industry High-Quality Development Forum concluded last weekend in Yumen, Gansu Province. According to the forum’s key messages, the imminent implementation of the “dual carbon” strategy and the ongoing normalization of environmental inspections are imposing new, stricter requirements on the agrochemical sector, while also making the trend of eastern‑based agrochemical companies relocating to western regions increasingly pronounced. Industry experts contend that continuously optimizing industrial spatial planning, prioritizing innovation-driven development, accelerating the establishment of a modern agrochemical production system, and adopting entirely new R&D and manufacturing paradigms—such as green raw materials, intelligent manufacturing, and advanced formulation technologies—should become essential priorities for agrochemical firms shifting their operations westward.

According to data from the National Bureau of Statistics, in 2020 China’s production of active pesticide ingredients (expressed on a 100% basis) totaled 2.148 million tons, down 1.1% year on year. Among the 693 large-scale pesticide enterprises nationwide, main business revenue reached RMB 228.058 billion, up 6.1% from the previous year, while total profits amounted to RMB 19.062 billion, an increase of 0.5% over the prior year. Among the top three provinces in terms of pesticide output, Jiangsu recorded 582,000 tons, Shandong 285,000 tons, and Sichuan 276,000 tons. Meanwhile, Hunan, Gansu, and the Ningxia Hui Autonomous Region saw their output rise by 30.4%, 130.2%, and 33.6%, respectively, as newly added production capacity was effectively brought online, underscoring a growing trend of pesticide manufacturers shifting operations westward.

Li Zhonghua, Executive Vice President and Secretary-General of the China Pesticide Industry Association, stated that, as environmental protection policies in the Jiangsu and Zhejiang regions have tightened, pesticide companies have increasingly shifted their investments to other regions—often following the historical patterns of “heading east” or “going west.” According to association data, pesticide firms have launched a total of 85 out-of‑province investment projects involving 73 companies, including 25 listed enterprises, with combined investments amounting to RMB 57.4 billion. Among these, 21 companies have invested more than RMB 1 billion each, accounting for RMB 37.83 billion—66% of all cross‑regional investment by pesticide firms. Notably, companies from Jiangsu, Zhejiang, and Shandong have been the most active in expanding beyond their home provinces, with many projects located in western China. Specifically, among the 15 Jiangsu‑based firms that have invested elsewhere, four have established operations in Gansu, three in Ningxia, and two in Inner Mongolia; five Zhejiang‑based companies have invested in Inner Mongolia, Ningxia, Jilin, and Sichuan; and among Shandong’s outbound investors, three have set up facilities in Inner Mongolia and one in Gansu.

“The flow of corporate funds spans 16 provinces, municipalities, and autonomous regions, with a strong concentration in the western region—namely western Inner Mongolia, Ningxia, Gansu, Shaanxi, Sichuan, and Chongqing. A total of 41 enterprises have made investments, accounting for 58% of the surveyed figures. The largest number of investments is in the Inner Mongolia Autonomous Region, involving 15 companies, with Wuhai and Alashan each hosting six. Next comes the Ningxia Hui Autonomous Region, with nine investing firms, followed by Gansu Province, with seven. The key product categories attracting investment include herbicides such as glufosinate‑ammonium and phosphinothricin; insecticides like acetamiprid and flonicamid; and fungicides including azoxystrobin and tebuconazole,” said Li Zhonghua.

Source: China Chemical Industry News

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