The large subsidy of government purchase has stimulated lots of domestic pesticide enterprises to get involved in the bid inviting.

1. Government Purchasing: Excited but Hard to Involve for Most Pesticide Enterprises
Summary: The large subsidy of government purchase has stimulated lots of domestic
pesticide enterprises to get involved in the bid inviting.
Tags: pesticide, fertilizer, agricultural, pesticide enterprise, pesticide production, winter wheat
Since the Ministry of Agriculture of China (MOA) released the agricultural subsidy policy on 6
April, 2012, USD253.16 million (RMB1.6 billion) of subsidy has been allocated to 11 winter wheat
planting provinces and areas in China to subsidize peasants' use of pesticides and foliar-fertilizer
on winter wheat, with total planting area reaching 21.33 million ha., based on CCM International’s
latest issue of Crop Protection China News.
The main reason for allocating such large amount of subsidy by the MOA in just two months is to
ensure the high and stable yield of the winter wheat this year.
Although the subsidy seems to be a tip of the iceberg of Chinese Government's agricultural
budget made at the beginning of 2012, over USD194.41 billion, it is still a big cake for domestic
pesticide enterprises.
Driven by the large profit in the subsidy, many domestic pesticide enterprises scrambled for the
bid inviting of local governments. Some pesticide enterprises in other provinces and areas even
made great effort to go cross-regional bid.
"We have paid great attention to the dynamic of government purchasing. We set the goal of
achieving an order worth USD12.66 million when we got the information that the Henan
Government was planning a government purchasing of USD63.29 million. Aiming to get the
order, we set up a special team to prepare all the documents needed in the bid and tried our best
to make all the procedures right," said a manager from Guoguang Agro-Chemical Co., Ltd., a
large pesticide enterprise located in Sichuan Province.
However, even if enterprises are very excited about government purchasing and put a lot of
enthusiasm on it, many of them still can't get involved, even for some large pesticide enterprises.
Owing to the cumbersome procedures of the bid inviting, lots of pesticide enterprises lack the
experiences of preparing bid materials. As many pesticide enterprises located in different

2. provinces went to other provinces for the bid inviting, they were forced to give up when they found
that it was impossible to fetch the materials needed in a short time.
In addition to the cumbersome procedures and lots of bid materials needed, the high threshold
set by local governments was also a big threat to the pesticide enterprises who want to gain the
bid inviting, especially those medium and small sized ones.
Take the threshold of the bid inviting of pesticide purchasing by governments in Shandong
Province and Henan Province for example. The two provinces invited public bidding by county-
level authorities.
Suppliers should be independent legal entity with registered capital no less than USD1.58 million.
Owing pesticide production license, pesticide registered license and product standard certification
should be one of the main requirements and all these licenses should be valid. Pesticide products
should get registered on wheat. Enterprises should issue qualification test report of provided
products. Enterprises should own the quality control lab and five years of production experience
of related products. And the capacity of the related products should exceed 1,000t/a.
Some provinces which invited public bidding by provincial authorities only allowed large and
famous pesticide enterprises to participate.
Facing the high threshold set by governments, small-sized pesticide enterprises have to find their
own ways to attend the bid. Aiming to meet the requirements, many small enterprises choose to
co-found pesticide enterprises with manufacturers, large pesticide dealers, etc. Forming coalition
bidder with qualified enterprises also can help them to participate.
As Chinese government's focus on the governments purchasing of pesticides increases year by
year, domestic pesticide enterprises start to realize the importance of anticipating and achieving
the bid inviting. It not only provides great profit but also a good marketing measure for a
company's products due to the government's credibility. However, different from normal
marketing channels, government purchasing seems to be a tough task for most of domestic
pesticide enterprises. How to overcome the problems of less experience in dealing with
governments, knowing well all the cumbersome procedures during government purchasing is now
become the first puzzle for most domestic enterprises to solve.
Source: Crop Protection China News 1212
http://www.cnchemicals.com/Newsletter/NewsletterDetail_16.html

3. Content of Crop Protection China News 1212:
Government purchasing: excited but hard to involve for most pesticide enterprises
Glyphosate price rises against market trend
Large area in China attacked by drought
Full implementation of new pesticide policy in Hainan postponed again
MIIT releases new policy for renewal of pesticide production licenses
Zhejiang Wynca to set foot in seed industry
Shandong Dacheng ready for being backdoor listed
Jiangsu Kuaida to largely expand phosgene capacity
Jiangsu Lanfeng puts some new projects into production
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and 30th(31st) of every month, aims to gain a deep insight into Chinese market, supply the latest
market data and strategy support, analyze the newest legislation and policy and grasp the future
market trend.
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