A new series of industry reports from PricewaterhouseCoopers, entitled
China risks and rewards, examines the impact of China on a number of industrial sectors, including an in-depth look at some key issues of particular importance to industrial companies operating in the Chinese marketplace. In this instalment, we focus on recent developments and future outlooks for the agrochemical sector.
Why focus on China?
Chemical companies cannot afford to ignore China, currently the fourth largest chemical producer and the fastest growing chemical consumer in the world. China is forecasted to become the third largest chemical producing country by 2006, behind the US and Japan, but ahead of Germany.
China is also the largest importer of chemicals globally, and continued robust economic growth looks likely to fuel continued expansion. China’s emerging presence as importer, processor, consumer, and exporter of industrial chemicals will reshape the economics of the industry. PwC can help chemical companies understand this transition.
Key messages from our report:
- China may represent one of the few growing markets for crop protection products and GM seeds.
- China challenges the sector's common wisdom that that agrochemicals companies need to be large, cover a wide area of the global market, and be big enough to support a large R&D programme in order to compete. Chinese manufacturers of generic crop protection products may in future be able to challenge the major global players on their home turf by producing low-priced generics.
- The Chinese government is actively encouraging domestic research on GM seeds, but there is still some controversy around the use of GM crops.
- An increasing need for grain may signal opportunities for multinationals, but operating in China means understanding intellectual property issues, local cultivation patterns, price sensitivity and crop protection preferences.
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