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China seed market: New market research published
Seed China News 1301 - a new market research report on 2014-03-12 09:05:02
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In 2012, overcapacity was still a lingering shadow for various industries in China. Statistics show that overcapacity of steel amounts to 51%, automobile to 12%, cement to 28%, pesticide to 60%, photovoltaic to 95%, etc. Although the Chinese government set a target to eliminate backward production capacity in 19 industrial sectors in 2012, the pressure caused by overcapacity has continued to increase at present, which is dragging the sustained recovery of China´s economy.

Recalling the year of 2012, the investment in high energy-consuming industries, like iron & steel, automobile, cement, etc., has followed the accelerated growth state in early 2011. The increasing investment in those industries would further improve the risk of overcapacity in the future. It is expected that overcapacity will continue to persecute enterprises in those industries. Coupled with the rising costs in raw materials and labor, the unsatisfactory profitability of most enterprises would be hard to be improved obviously in 2013.

The overcapacity should not be simply attributed to the inadequate regulation from government. Some industrial insiders even worry that the market mechanism would be distorted if the government makes too much interference in industries. The causes of overcapacity are actually complicated, probably including the shrinking demand in overseas market, the blind guidance from regional governments, enterprises´ lack of product positioning and innovation, etc.

Similarly, the overcapacity also exists in China´s seed industry, the source of agricultural industry chain. The excessive supply of homogenous crops seeds like corn and rice has become a repeating nightmare for most seed enterprises at home. On the government´s side, industry mergers and acquisitions must be accelerated relying on a higher access threshold, with a number of small or weak enterprises to be merged or eliminated. For seed manufactures, the profitability improvement should be aided by stronger R&D capacity, improved seed products with higher added value, more comprehensive service for growers, etc. Seed players without innovation would only be stagnated or eliminated in competition.

Key Headlines

- The industrialization is not yet started for China´s seed industry although the industrial operation in large scale and specialization already takes shape.

- The State Council promulgated the National Development Plan 2012-2020 for Modern Crop Seed Industry, a follow-up implementation of the Suggestions for Accelerating Development of Modern Crop Seed Industry.

- The agricultural machinery and technology integration project of China National Hybrid Rice R&D Center was launched, aiming to integrate agricultural machinery and technology in the whole rice industry chain.

- It is not easy to launch IPO for domestic seed enterprises mainly due to their comparatively weak comprehensive strength and the strict approval system of IPO at home.

- Shandong Denghai is going to set up a holding subsidiary in 51:49 stake to shore up sales expansion and to enhance R&D capacity.

- Winall Hi-tech is vigorously expanding its new seed business segments: corn and wheat by introducing improved varieties and building seed processing center with raised funds from IPO.

- China´s GM cotton is puzzled by some problems such as rising pests, low quality, decreasing efficiency and bottlenecks in R&D.

- The main situation of East China´s TYLCV is analyzed, mainly covering damage of TYLCV, occurrence regions, anti-TYLCV tomato varieties, prevention and control methods, etc.

- Mr. Shen Xiaolin, General Manager of a seed company named Guangzhou Shanghe Agri & Tech Co., Ltd., discussed the main market situation of sweet corn in Guangdong.

- Different corn varieties are required in different accumulated temperature zones of Heilongjiang.

- Institute of Genetics and Developmental Biology (IGDB), Chinese Academy of Sciences, and Keygene N.V. successfully completed a research collaboration leading the construction of a sequence-based physical map of the wheat A genome.

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Mike King
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