Critical players in China's seed industry recently met in Changsha, Hunan Province's capital city, to regulate the fragmented seed industry.
China currently has more than 8,700 approved seed companies, but only 95 of them have research and development capacity (R&D). In the domestic market, 88% of grain seeds are nurtured by R&D institutions, rather than seed companies. The competitive foreign seed companies, therefore, put the country's relative undeveloped seed sector under tremendous pressure.
In the R&D session, transnational companies would normally invest 10% of their sales income; some even hit a record of 20%. Meanwhile, the figure lingers at 1% in most Chinese seed companies with many even investing lower than 1% of their sales income into researching and developing high-quality grain seeds.
In recent years, foreign seed corporations have flooded into the Chinese market, eating into domestic companies' profits. Take Pioneer, the wholly owned subsidy of Dupont, the American giant R&D based chemical company, for example. It has owned a planting area of about 9.9 million acres in China, while 4.92 million acres of the land is used to plant the company's top quality corn, which accounts for 13% of China's total planting areas of corn.
"With its brand of 'xianyu335,'Pioneer made a net profit of 600 million yuan ($92.5 million)in China last year, and that's 40% to 60% of the total net profit of corn planted in the Chinese market," Li Ming, professor from China Agricultural University said.
Even in joint ventures, Chinese corporations have been blocked out from core technologies, according to a consultant from the Chinese Maize Improvement Center and expert in American maize breeding.
To promote development in the domestic seed industry, a higher industrial threshold was set at the summit. It was decided that China should rule out uncompetitive, even bogus companies, in the seed sector.
Zhang Shihuang, a professor at the Chinese Academy for Agricultural Sciences and the country's top maize scientist told the Economic Information Daily in an interview that a scientific management system in the industry should be set up, in which R&D institutions and commercial companies have their separated, yet coherent, research and marketing tasks.
According to him, the best solution is to back up companies with good policies, and hopefully in 5 to 10 years, enterprises can grow into major players in the market to innovate and breed commercial products.
