Although several years ago, transnational agrochemical companies still had some concerns about China's intellectual property rights (IPR) protection, this did not stop them from increasing their investments in the country. According to an article published in *Chemical and Engineering News*, a U.S.-based publication, China's continuous improvement in IPR enforcement, combined with its cost-effective production environment and growing demand for "green" food, has attracted more multinational agrochemical firms to enter the market.
The article highlights that in the past, many Chinese agrochemical producers used active ingredients that were already patented by foreign companies. For instance, DuPont invested $25 million in a production facility in Shanghai in 1992, only to find that its patented herbicide was later replicated by another manufacturer. However, as China’s IP protection measures have strengthened, such cases have become increasingly rare.
According to the global general manager of Degussa AG’s agrochemicals and intermediates business, the issue of infringement in China can now be effectively addressed, and the risk of arbitrary infringement no longer deters large international players from entering the market. He noted that compared to consumer goods, counterfeit agrochemical products are not a major concern in China. He also cited Syngenta as an example, which recently won a lawsuit in Nanjing against two Chinese companies for patent infringement, further demonstrating the improving IP environment.
Degussa itself supplies various active ingredients to other agrochemical producers rather than selling directly to farmers. Recently, the company invested in a cyanuric chloride plant in Liaoning Province, which is used in agricultural chemicals and dyes.
Looking ahead, more market opportunities will open up, giving foreign companies even more reasons to invest in China. According to BASF, China is currently the sixth-largest agrochemical market globally, valued at $1.5 billion. While this is less than half of Japan’s market, it shows strong potential for growth, especially as Chinese consumers shift toward healthier, environmentally friendly food options.
As China’s economy grows, people are becoming more conscious of food safety and sustainability. Supermarkets in big cities source products from reputable farms that meet national safety standards, and these farms are also key export bases. In Hong Kong, Seoul, and Tokyo, Chinese produce like tomatoes, apples, and lettuce is widely popular.
Taking into account China’s massive market size and low labor costs, experts believe the country will soon emerge as one of the most significant fruit and vegetable exporters globally. BASF has already started selling its agrochemicals directly to large, well-known farms in China.
Despite the rapid growth of the Chinese agrochemical market, challenges remain. Many small-scale farmers lack education and use outdated, harmful pesticides due to their low cost. Environmentally friendly alternatives, developed by international companies, tend to be more expensive. Nevertheless, leading multinationals have chosen to introduce their latest products to China, believing that the long-term benefits outweigh the risks.
BASF recently launched its F500 fungicide series in China and emphasized that it would not delay product launches in the region due to IP concerns. The main driver for increased investment, however, remains the rising competition from domestic Chinese firms.
Degussa’s spokesperson stated that foreign companies must eventually enter the Chinese market to face competition from local players. If they don’t, these companies may gain a strong foothold and later challenge international firms on the global stage. Red Sun Group, based in Nanjing, reported annual sales of $500 million, a figure that, while questioned by some Western managers, reflects the growing strength of domestic agrochemical companies.
Multinational firms are expanding their presence in different ways. For example, Sumitomo Chemical partnered with a Chinese firm to build a herbicide plant in Dalian for export. Degussa’s plant in Liaoning mainly serves domestic agrochemical and dye manufacturers. Syngenta also completed a paraquat production plant in Jiangsu in 2001.
BASF has conducted over 100 technical training sessions in China, and orders for agrochemical intermediates from Chinese customers continue to rise. Dow Chemical and DuPont have also set up R&D labs in Shanghai, focusing on the Chinese market, including agrochemical development.
In the words of Degussa, the influx of international agrochemical companies into China is an inevitable move. “If you want to keep up with the times and maintain your market position, you must enter China.â€
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