Since last year, the fertilizer industry has experienced the largest market shock since 2008. The baptism of the market, while accelerating the transformation of fertilizer patterns, also forces us to rethink the logic of future development.

Jiangsu Huachang Chemical Co., Ltd. (hereinafter referred to as Huachang Chemical), located in the most active Yangtze River Delta region of China's economy, has been growing since its establishment in 1970 and has become a billion dollar enterprise with three major sectors of coal chemical, salt chemical, and petrochemical, as well as three new growth poles of new fertilizers, new energy, and new materials. Located in the developed economic belt along the coast and rivers, facing the three major mountains of resources, environmental protection, and costs, Huachang Chemical's transformation and exploration in the fertilizer industry are more challenging, making its success more exemplary.

In this issue of "Interview with Big Boss", there is a dialogue with Hu Bo, Chairman of Huachang Chemical. Hu Bo is an experienced chemical engineer with a technical background. He entered the fertilizer industry in 1983 and promoted or led several major milestone projects such as the transformation, relocation, and listing of Huachang Chemical. This year happens to be Hu Bo's 40 years of involvement in the fertilizer industry. As a seasoned practitioner and trendsetter in the industry, his insights will bring us more enlightenment.

The fertilizer industry is undergoing comprehensive changes

Agricultural inputs report: In recent years, we have seen a significant increase in volatility in the fertilizer market and increased uncertainty in the industry's operation. Behind this, what changes are indicating that the industry is undergoing?

Hu Bo: The fertilizer industry is currently in a stage of transformation and transformation, with changes occurring both upstream and downstream. This change is comprehensive and full chain.

Firstly, from the user side perspective, in the past, there were mainly scattered small farmers. Now, with the transfer of land, there are more and more large growers, and their understanding and requirements for fertilizers are also increasing. This will lead to an excess of technologically backward fertilizers, while efficient new fertilizers cannot meet the demand yet. Secondly, from the perspective of production, on the one hand, production enterprises are constantly integrating and concentrating, and on the other hand, they are extending the industrial chain, developing new products, and opening up new tracks. That is to say, both the upstream and downstream patterns are in a state of change. Thirdly, from the perspective of circulation, the era of channels with wholesale and retail as the core is slowly passing, and the future will be the era of technology as the king. If marketing was important in the past, then technology is important in the future. To promote technology and innovate agricultural services, it is also necessary to transmit the needs of farmers to the production end through information feedback, providing directional guidance for technological innovation.

The convergence of the above factors has brought about changes in the industry and market fluctuations. In the coming period, this change will be the norm.

The future will be an era where technology is king

Agricultural inputs report: Just now you mentioned that technology is king, so as for fertilizers, what do you think is the direction of technological innovation?

Hu Bo: Actually, as early as 2007, we anticipated the upcoming changes in the fertilizer industry. At that time, we proposed the nine character policy of "medium concentration, multi nutrition, and functionalization" and carried out a series of product research and innovation. The fact proves that these three directions are correct. Only by continuously developing new products and improving fertilizer utilization can the goal of zero growth in fertilizer usage become possible, and enterprises can continue to grow.

Hu Bo, Chairman of Jiangsu Huachang Chemical Co., Ltd

Agricultural Materials Introduction: Huachang Chemical has long established the concept of technology as the king. So, after years of exploration, what achievements have been made?

Hu Bo: Technology is king, which Huachang Chemical has always adhered to. Over the years, we have collaborated with many universities to provide support for technological innovation. For example, urea ammonium nitrogen fertilizer achieves synergistic efficiency by combining different forms of nitrogen. We have conducted many experiments in collaboration with the Nanjing Institute of Soil Research, Chinese Academy of Sciences, and designed formulas that can adapt to different soils and crops. A large amount of data indicates that the nitrogen utilization efficiency of urea ammonium nitrogen fertilizer can be increased to over 50%.

For example, we have long noticed the drawbacks of increasingly monotonous fertilizer nutrients. Crops do not only have nitrogen, phosphorus, and potassium nutrients, but also require medium and trace elements in order to improve fertilizer efficiency and improve crop quality. Huachang Chemical has launched many new products around "medium concentration, multiple nutrients". This is also an important adjustment in the direction of fertilizer development within the industry.

For example, based on the consideration of technology as the king, Huachang Chemical attaches great importance to agrochemical services and technology marketing. We have been persistently conducting experimental fields, holding observation meetings, and organizing arena competitions for many years, focusing on the effectiveness of heroes rather than relying solely on marketing methods. It's actually difficult to do this, but we need to persevere. As large growers become more rational in their choice of fertilizers, they will definitely consider the technical content and cost-effectiveness of fertilizers. I firmly believe that this is the right direction.

The growth "password" of the main force of fertilizer supply guarantee

Agricultural Materials Introduction: Huachang Chemical is located in the developed economic zone in the eastern region. For more than 50 years, it has adhered to the main business of fertilizer, and has continuously grown and strengthened, becoming the main force in ensuring fertilizer supply. What does it rely on?

Hu Bo: Compared with the central and western regions, Huachang Chemical indeed faces greater challenges in fertilizer development: firstly, it is far from the resource area; secondly, it is located in a relatively developed area of the Yangtze River Delta, with high labor costs and high safety and environmental protection requirements. However, pressure can often force a company to enhance its ability to seize opportunities, and weaknesses can also be reversed into advantages for a company's development.

Huachang Chemical has an excellent tradition, and every generation of our leadership team is committed to strengthening the competitiveness of the enterprise. The pace of transformation, upgrading, and innovation has never stopped. We also have a good corporate culture inheritance, which is not forgetting our original intention and never giving up on fertilizers due to industry fluctuations.

More importantly, we must adhere to technological innovation. Huachang Chemical's total assets of over 7 billion yuan and output of over 10 billion yuan rely on technology. In the era where technology is king, if innovation is not emphasized, enterprises cannot grow.

Factory area

Agricultural Supplies Guide: The more industry fluctuations occur, the more resilience a company can demonstrate. Where is the strength of Huachang Chemical's industrial chain?

Hu Bo: After years of hard work, Huachang Chemical has created a pattern of both adhering to chemical fertilizers and going global in fertilizer utilization. In Huachang Chemical's three major sectors of fertilizers, basic chemicals, and new materials, fertilizer production accounts for the largest proportion, but profit accounts for the smallest proportion. Nevertheless, Huachang Chemical still regards ensuring fertilizer supply as the top priority for the enterprise, which is also a reflection of our practical actions in implementing fertilizer supply guarantee. Of course, as a company, it is necessary to create profits in order to have accountability to shareholders and employees. Huachang Chemical's industrial advantage lies in being able to use other businesses to compensate for the fertilizer sector and achieve coordinated development between the two.

Export products and brands to the "the Belt and Road"

Agricultural inputs report: The "Stable Growth Plan for the Petrochemical and Chemical Industry" recently released by seven departments proposed to steadily promote international fertilizer production capacity cooperation. As a large enterprise along the eastern coast, what considerations does Huachang Chemical have?

Hu Bo: Making good use of the domestic and international markets can not only serve the national "the Belt and Road" initiative, but also better regulate the domestic market and promote the supply of fertilizer. In expanding the agricultural market along the "the Belt and Road", Huachang Chemical has the advantage of convenient land and water transportation, and the annual throughput of the port is up to 300 million tons, which has certain advantages.

Huachang Chemical focuses on expanding to Southeast Asia, where fertilization is still relatively backward. In implementing the "going out" strategy, Huachang Chemical has considered not only exporting products, but also exporting Chinese brands from the beginning. Chinese fertilizers are not uncommon in the Southeast Asian market, but there have always been no Chinese fertilizer brands because Chinese fertilizers enter the Southeast Asian market in bulk.

Huachang is one of the first companies to export fertilizer brands overseas. We send employees to guide local farmers in fertilization and impart knowledge about fertilizers. After so many years of effort, Huachang Chemical has established a firm foothold in Southeast Asia and cultivated a group of loyal users. Southeast Asia has a vast agricultural market and can have great potential.

Factory area

The fertilizer industry is a "long live" industry

Agricultural inputs report: From the seller's market to the dominance of channels, and now to the dominance of technology, we can easily see that the competition in the fertilizer industry is becoming increasingly fierce. How do you view the prospects of the fertilizer industry?

Hu Bo: Fertilizer is the "longevity" industry. To survive and reproduce, humans need a supply of protein. Most of the nitrogen required for protein synthesis comes from crops, and the nitrogen in crops, except for soybeans, must be supplemented with fertilizers. Therefore, fertilizers are always needed. The fertilizer industry will always exist with human society, and the key is that our fertilizer products need to be continuously upgraded according to market demand.

Hu Bo accepted an interview with this newspaper

Agricultural inputs report: Although fertilizers are a necessity, the contradiction of oversupply also exists. What do you think?

Hu Bo: The surplus is traditional fertilizers, and the new fertilizers that farmers need are not enough. We need to compress the excess fertilizer and develop new fertilizers that meet the needs of farmers. Through technological innovation, we aim to make our formulas more targeted, increase nutrient utilization, balance nutrition, and make agricultural ecology greener. The potential for a new round of growth in the fertilizer industry comes from the development of new fertilizers, and there is still a lot of room for growth, which is also the future direction of Huachang Chemical.