China’s Concerns for Another Challenging Year

By Renee Targos

China’s crop protection industry is facing obstacles stemming from 2024 challenges. AgriBusiness Global spoke with Chinese executives to explore these concerns and the business strategies and must-haves for successful partnerships for doing business in China in 2025.

One main concern for the upcoming year is U.S. President Donald Trump’s enforcement of China tariffs.

David Li, Marketing Director for SPM Biosciences, says while a concern, Chinese businesses are developing a workaround plan to combat increased costs.

“The tariff hopefully won’t be applied until the third or fourth quarter of 2025, so Chinese manufacturers still have a window to supply to the U.S. market in the first half of 2025,” says David Li. “Some companies are looking at the U.S. market as top priority because of the geopolitical issues between China and U.S.”

 

Chinese companies need to plan for other influences on exports, such as the Russia-Ukraine conflict and South American financial shifts.

Kevin Li, General Manager of Fuhua Crop Protection Division, Sichuan Leshan Fuhua Tongda Agro-chemical Technology Co., Ltd, says, “With intensifying geopolitical uncertainty, Chinese companies must strengthen financial and political risk management to safeguard operations.”

Kevin Li says Chinese companies are strategizing for these four concerns:

Demand Fluctuations “Post-pandemic price volatility has led to delayed purchases and the widespread adoption of zero-inventory strategies downstream is causing instability.”

Overcapacity “Excess production capacity in China led to significant price drops, sometimes nearing cost levels, creating immense operational pressure for companies.”

Steady Demand Growth “Despite challenges, overall demand of 2024 showed steady growth compared to 2023. In 2025, the demand will keep increasing driven by population increases and expanded planting areas in multiple countries.”

Cost Pressures “While supply chains recovered during global economic recovery, rising energy prices and transportation costs continued to impact production and pricing of agrochemical products.”

To counter these challenges, many Chinese companies are considering advancing their territory through M&A and capital investments, while diversifying portfolios with biologicals, high-load formulations, and ag tech.

Other ways Chinese companies are strategizing to pull ahead of the competition is to work on supply chain optimization by focusing on cost efficiency and high-quality products.

Four Partnership Points

While Chinese companies are creating strategies to advance business in 2025, here are four pointers for foreign companies wanting to build partnerships in China.

1. Value Added Support—Going Both Ways

As Chinese companies look for partners to assist with growth and diversifying their portfolios, Kevin Li says foreign companies wanting to do business in China should offer value-added support and win-win business models.

“Foreign partners offering technical support and collaborative R&D can help Chinese companies transition from a manufacturing centric approach to innovation-driven development,” says Kevin Li. “Investment-based collaboration and resource sharing enable deeper involvement by Chinese companies in product or market strategies, creating mutually beneficial outcomes.”

Baiji Huang, General Manager, Sino-Agri Leading Bioscience Co., Ltd., agrees.

“Domestic companies benefit from integrating advanced foreign agrochemical technologies, enhancing their own competitive edge,” says Huang. “This mutually beneficial model is critical to the success of both parties in China’s agricultural sector.”

2. Well-Established Networks

Huang says for foreign companies aiming to enter the Chinese market and secure a foothold in its highly competitive market, establishing strategic partnerships with leading domestic agricultural input distribution enterprises is essential.

“Global firms can leverage local partners’ market channels and distribution networks while gaining a deeper understanding of the unique characteristics and demands of China’s agricultural market,” says Huang. “This insight allows for the adaptation and optimization of products and services to meet the specific needs of Chinese growers.”

3. Solutions Scope

Another quality foreign companies should seek in partnering with Chinese companies is their ability and scope to provide solutions.

“Seek a partner that can deliver a fully integrated solution,” said a Rainbow Agro spokesperson. “Companies that seamlessly manage registration, portfolio, formulation development, production, and delivery processes offer an unmatched advantage. Full integration ensures streamlined operations, greater control over quality, and cost efficiency—all critical factors to serve markets worldwide.”

4. Long-Term Collaboration

Foreign companies should come with a long-term collaboration goal when looking to establish Chinese business partnerships. While it takes time to build trust and a working relationship, a Rainbow spokesperson shared this advice: “Look for a company that is aligned strategically to your business goals and shares a common mindset and way of working. This will build a long-term, win-win partnership that will lead to efficiency gains and lasting growth.”

Kevin Li agrees, “Establishing stable strategic partnerships with clear long-term goals fosters sustainable growth while mitigating the risks of short-term pricing wars.”

Adaption is Key

As 2025 starts to unfold, the exciting outlook seems to be about innovation and growth. With this comes an increased need for flexibility and the ability to quickly pivot.

“Partners are increasingly looking for businesses that can adapt to their specific needs, whether that means aligning with existing business models, creating tailored solutions, or responding quickly to market changes,” says a Rainbow spokesperson.  “The ability to listen, adapt, and deliver customized approaches strengthens relationships and builds trust.”

Adaption is becoming increasingly important as the industry continues to evolve with the changing needs of growers and restrictions put on by regulations.

“We are moving from a period of rapid increasing in capacity to a period that everyone starts to slow down and think of where to go next. Sticking with a specific strategy will be important for each company,” says Kevin Li. “As the margin gets narrower in the channel, everyone within the industry will be impacted. As a result, efficient operation, well-structured management, and quick reactions to the change in market will become more important in the following years. Companies that can integrate resources will take the lead in the era where another round of consolidation might not be far away.”   •