Good News is Coming for China’s Pesticide Export in the Battle Against Virus

Recently, the outbreak of new coronavirus pneumonia has caused huge impacts on China’s national economy and various domestic industries, and the pesticide industry is unavoidable. Especially on the evening of January 30th at local time, after the Director-General of the World Health Organization announced that the new coronavirus epidemic in China has constituted a public health emergency of international concern, China’s pesticide exports will become more and more complicated and export risk management of Chinese pesticide export companies will face new requirement and challenges.

In order to understand the impact of the epidemic situation on pesticide export business in detail, China Crop Protection Industry Association (CCPIA) conducted a survey of major export companies for agrochemical industry to investigate the affect of the epidemic situation on the shipment of goods, production of orders, return of employees, and contacts between upstream and downstream

The impact of the epidemic on pesticide exports in the short term is not optimistic
The survey results show that interviewed companies generally think that the impact of the epidemic on corporate exports in the short term is not optimistic, and the upstream and downstream and supply chain related links have been affected. The impact of the epidemic on pesticide exports is mainly reflected in poor logistics, product supply, product exports, and enterprises employment and other aspects.

(Please click the above chart to enlargify)

Figure 1 Analysis of factors affecting the export of pesticides to pesticides
(Data source: Survey results)

The logistics problem is the biggest problem encountered in pesticide export during the epidemic prevention and control. 98% of the enterprises said that due to the epidemic, international shipping and air transportation were in a stagnant state.  Logistics  from  domestic  factories  to  ports  was  not  smooth,  causing  a backlog  of  goods  in  warehouses  and  Ports  could  not  complete  the  delivery within the time limit agreed in the international trade contract, which resulted in the  cancellation  of  some  orders.  Some  companies  report  that  “the  delay  in export  time  has  occurred.  To prevent  the  epidemic  from  spreading,  the expressway to the port has been partially closed, and high-speed auxiliary roads also have layers of checkpoints that affect the delivery of goods. Some ports have adopted regulatory measures. Affects the time of shipment of goods on board. ”

From the perspective of product supply and export, due to the majority of domestic  pesticide  production  enterprises  affected  by  the  epidemic,  most  of them have not started work normally. The operating rate of normal start-up companies has also decreased compared with previous years, resulting in tight supply of some products and failure to execute export orders. Ninety percent of the companies participating in the survey said that products cannot be exported at present.
From the perspective of enterprise employment, affected by local epidemic prevention and control policies, some foreign employees are unable to resume work  in  a  timely  manner.  Enterprises  have  adopted  delayed  work  or  flexible office  to  arrange  work,  and  some  work  cannot  be  carried  out.  Companies generally report that due to visa restrictions in various countries and related regulations  for  controlling  the  spread  of  epidemics  in  China,  foreign businessmen  have  cancelled  their  original  business  visits  and  contract negotiations in China. At the same time, companies are unable to conduct international customer visits and business negotiations. Foreign communication channels have affected contract signing and transaction opportunities. 88% of surveyed  companies  expect  that  the  export  volume  in  2020  will  decline  to varying degrees.
In addition, the development of the epidemic has also led to the cancellation of foreign businessmen’s participation in trade exhibitions in China, and some companies’ overseas participation in exhibitions have also been forced to cancel, which   seriously   affects   and   loses   the   most   effective   product   sales   and opportunities for developing new customers.

In  general,  the  export  of  pesticides  in  China  is  mainly  restricted  by  the production and  transportation capacity of  domestic enterprises and  the  start time.  The  epidemic  situation  has  increased  the  uncertainty  of  foreign  trade contract performance, and export companies are facing risks of contract cancellation, payment of penalties, and default on payments, which are rising and accumulating. Combined with factors such as product supply, labor costs, logistics and transportation, some enterprises are afraid to Orders and quotes.

In summary, it can be seen that the epidemic will have a greater impact on pesticie exports in2020. Because pesticide are seasonal products, if the epidemic can not effectively controlled within a short period of time, its impact on exports will be difficult to predict. At least, in the first half of this year, the export situation will not be too optimistic. An enterprise from Shandong province said :”The qualitative limitation of the current epidemic is three months. During this period, most countries will ty their best to control the import of pesticide products from China; three months later, it will be May。 The timing of some medications has ended, and export will be greatly affected. ”
Fortunately, 80% of the surveyed companies said that they have already made adequate emergency management measures in response to the epidemic, and will adjust maket layout and planning  in time to minimize losses according to the development of the epidemic.

The long-term impact of the epidemic on China’s pesticide exports is small
Although affected by logistics and product supply, the epidemic situation will have a greater impact on pesticide exports in the short term, but in the long run, the impact will be small. The layout and production and supply capacity of the agrochemical  industry  are  presented  by  the  global  industrial  structure  as  a whole. China is the world’s major pesticide exporter and occupies a leading position in the international agrochemical market. Its products are exported to more  than  180  countries  and  regions.  According  to  national  statistics  in November,  about  67%  of  output  is  used  for  exports.  Short-term   supply disruptions do not determine long-term supply relationships. The predicament currently encountered by enterprises is only short-term. Looking at the long- term cycle of economic development, if the spread of the epidemic globally is controlled, the overall impact will not be too great. Once the normal production and logistics of production enterprises are smooth, the supply and export of products will return to normal. Some companies reported that “the epidemic will have  an  impact  on  China  ’s  pesticide  exports.  The  epidemic  situation  will increase the cost of logistics and quarantine of pesticide export products, and the communication with foreign customers is limited. The impact is limited. “
In general, the epidemic situation has a short-term impact on Chinese pesticide exporters and exporters. Enterprises must pay close attention to the dynamic changes of the epidemic situation, do a good job of management coordination and planning, and do more sophisticated management.
How to protect the stable development and protect the rights and interests of enterprises in the epidemic situation? At present, exporting enterprises urgently hope that the country can introduce a series of policies that are conducive to the export  of  enterprises,  so  that  enterprises  can  obtain  a  buffer  period,  reduce
losses, and overcome difficulties. In conjunction with this survey, the Association has put forward reasonable and feasible policy recommendations to relevant departments. According to reliable information, the Department of Planting Management of the Ministry of Agriculture and Rural Affairs has just studied the pesticide export policy.  To  actively  promote and  help  enterprises export, the policy will be released recently.
At the same time, in terms of epidemic prevention and control, we also saw hope.
From the news released by Xinhuanet on February 12, we can see that since February,  the  daily  increase  of  newly  diagnosed  cases  outside  Hubei Province has reached a peak on February 3, and New Confirmed Cases Outside Hubei Drop for Eighth Consecutive Day. We have seen the dawn of victory in this nationwide resistance!
We firmly believe that the all Chinese people are brave and united to try our best to curb the spread of novel coronavirus pneumonia in order to win the battle against the epidemic.

 

 

 

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