With its huge market, China is the second largest consumer of crop seeds, attracting great attention from multinational seed companies. The Chinese seed market has a great potential for commercial interests. Indeed, for multinational seed companies, China is not only a large consumer market, but also an unmatched production base for crop seeds. Entering the Chinese market and developing along with the development of the Chinese seed industry becomes an important strategy for multinational seed companies to achieve a global victory in the intense competition of seed market.
Considering the disparity of culture and values between China and the West, multinational seed companies know well that they have to adopt a localization strategy to settle, develop and expand in China, especially workforce localization. Following the saying "When in Rome, as do as the Romans do", they try to tap into Chinese economy and society as soon as possible in terms of talent training and reserve, from germplasm resources collection to variety breeding, corporate culture to the public welfare, technology transfer from home to R&D in China, etc. With a solid base for the localization in China, multinational seed companies have a clear path to achieve a rapid expansion.
There are generally four major strategies for multinational seed companies to achieve their localization in China.
The first is setting up joint ventures. Multinational seed companies clearly understand that they can't set up a company and dominate the Chinese market by themselves in a short time. Nevertheless, they can do so by cooperating with large seed companies in China. For example, in the 1990s, Monsanto respectively set up joint ventures with local seed companies in Hebei Province and Anhui Province, successfully introducing its Bt cotton variety in China. Some other multinational enterprises like DuPont, Syngenta and KWS followed this kind of strategy and successfully tapped into the Chinese seed market.
The second is setting up R&D bases. Aiming to strengthen technology export and market-oriented R&D, multinational seed companies have built a variety of R&D institutes in China. For example, in Oct. 2008, Syngenta established a biotechnology R&D center in Beijing, China's first agricultural biotechnology research institution set up by foreign capital. Then, in Oct. 2012, Syngenta jointed the Hubei Academy of Agricultural Sciences to set up an innovation center for natural products in Wuhan City, Hubei Province. Besides, in 2009, Monsanto established a R&D company named Monsanto Biotechnology Research (Beijing) Co., Ltd. The same year, Monsanto started conducting a collaborative research with the Chinese Academy of Agricultural Sciences in various ways by signing a Memorandum of Understanding with the latter.
The third comes with the employment of senior consultants. This is another crucial step for multinational enterprises to achieve their localization in China though it demands some preparatory work. For example, some multinational seed companies or international consulting institutes provided a financial aid for a number of scientific researchers who went abroad for study or training in the 1980s and 1990s. After returning China, most of these researchers occupied a position in research institutes, universities, associations or even government agencies. Many of them became senior consultants in multinational seed companies, including those who were promoted as academicians or important officials influential in certain field. With the combination of their senior consultants and capital strength, multinational seed companies are likely to influence the Chinese political, economic and scientific decision-making, helping to accelerate their localization in China.
Training professionals is another far-sighted and prepared strategy for multinational seed companies to completely tap into the Chinese market. Since 2000, DuPont has established scholarships in China's key universities such as Tsinghua University, Peking University, China Agricultural University, etc., with a total annual grant of USD100,000 divided among 2,000 students. In Oct. 2010, with the help of China's Ministry of Agriculture, Monsanto launched the Monsanto Scholarship Program in the Chinese Academy of Agricultural Sciences, China Agricultural University, Shandong Agricultural University, etc. Monsanto tends to award the outstanding undergraduate and graduate students determined to engage in R&D or industry in agriculture and life sciences' fields. It is worth mentioning that some masters and PhD hold key positions in research institutes and seed companies that had granted them, like Monsanto.
The disorder and underdevelopment of the Chinese seed industry means a great business opportunity for multinational seed companies. Their localization strategy paves the way to their sole proprietorship in the future. Currently, multinational seed companies are still prohibited for sole proprietorship or operation holding in China, but their acceptance is only a matter a time after their localization in the Chinese market. After all, being confident with the Chinese seed market, policy and law, multinational seed companies will transfer their joint ventures into sole proprietorship ratherthan withdraw their investment.
Table contents of Seed China News 1304:
Winall Hi-tech' M&A gets reward in 2012
Seed business of DBN develops stably in 2012
Shandong Denghai performance sees growth in 2012
China's first fund for seed industry set up
Second batch of seed enterprises gain operation license nationwide
Multinational seed companies achieve localization in China
Domestic fresh corn industry under vigorous development
Domestic potato seed companies hard to become bigger
Large grain growers: thriving but in straits
Wang Feng: "Super Rice" subjective gauge rather than objective standard
China's soybean import dramatically reduces in Q1 2013
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