Do Chinese Agro-chemical Companies Improve Their Competitiveness by Foreign Acquisitions?

By CnAgri2017-04-18 17:12:39 Print

Influenced by many factors such as technique R & D, brand and sales, Chinese plant protection, fertilizer and seed sectors all are involved in cut-throat competition, experiencing decreasing profits to some extent. In order to improve competitiveness, domestic agro-chemical companies use fund advantage to acquire foreign companies.

ChemChina’s acquisition of Syngenta has been officially approved by America and the EU. Syngenta is the largest plant protection and third largest seed industry company in the world, involving in providing “plant protection + seed + agricultural techniques” integration crop solutions to growers. 2015 sales revenues recorded 13.4 billion US dollars (plant protection accounted for 79% and seed took up 21%), and net profits reached 1.3 billion US dollars. ChemChina would invest 43 billion US dollars in acquiring, in order to gain its core breeding techniques, advanced R & D techniques of pesticide materials, complete pesticide production lines and sales channels in Europe and America.

In aspect of fertilizer, Kingenta acquired the EU’s biggest slow/controlled release fertilizer coating company EKOMPANY; it acquired Compo AcquiCo and would directly gain Compo’s R & D technical advantage of water soluble fertilizer business, as well as a sound sales network in the EU; it acquired Navasa an agricultural service supplier in Spanish.

However, simple acquisitions and consolidated financial statements can’t really improve competitiveness. It can only really improve its competitiveness by combining foreign advanced technique R & D, brand operation ability, leading agricultural service awareness with domestic production and operation, as well organic combination on culture.