Sample of Company Profile Service - cnchemicals.com Profile (Sample).pdf · Table 2.3-1 Production information of Fufeng Group Co., Ltd. Table 2.4-1 Import & export situation of MSG

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Sample of Company Profile Service

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www.cnchemicals.com E-mail: [email protected]

Contents

1 Shine Star (Hubei) Biological Engineering Co., Ltd. ................................................... 1

1.1 Basic information .......................................................................................................... 1

1.2 Company background .................................................................................................. 1

1.3 Production information ................................................................................................ 2

1.4 Import & Export .............................................................................................................. 4

1.5 Production registration ................................................................................................ 4

1.6 Production cost .............................................................................................................. 4

1.7 Financial information .................................................................................................... 6

1.8 Competitiveness analysis ........................................................................................... 7

1.9 Marketing and sale mode ............................................................................................ 7

1.10 R&D ................................................................................................................................. 7

1.11 Procurement ................................................................................................................. 7

1.12 Company dynamics .................................................................................................... 7

1.13 Site visit ......................................................................................................................... 7

2 Fufeng Group Co., Ltd. ................................................................................................... 8

2.1 Basic Information .......................................................................................................... 8

2.2 Company background .................................................................................................. 8

2.3 Production information ................................................................................................ 9

2.4 Import & Export ............................................................................................................ 11

2.5 Production registration .............................................................................................. 12

2.6 Production cost ............................................................................................................ 12

2.7 Financial information .................................................................................................. 13

2.8 Competitiveness analysis ......................................................................................... 14

2.9 Marketing and sale mode .......................................................................................... 15

2.10 R&D ............................................................................................................................... 17

2.11 Procurement ............................................................................................................... 17

2.12 Company dynamics .................................................................................................. 17

2.13 Site visit ....................................................................................................................... 18

LIST OF TABLES

Table 1.3-1 Production information of Shine Star (Hubei) Biological Engineering Co., Ltd.

Table 1.4-1 Import & export situation of Shine Star (Hubei) Biological Engineering Co., Ltd.

Table 1.6-1 Estimated manufacturing cost of Hubei Shine Star, May 2012

Table 1.6-2 Estimated leucine production cost of Hubei Shine Star, 2012

Table 1.7-1 Financial situation of Hubei Shine Star, 2012, USD

Table 1.7-2 Financial situation of leucine in Hubei Shine Star, 2012, USD

Table 2.3-1 Production information of Fufeng Group Co., Ltd.

Table 2.4-1 Import & export situation of MSG in Fufeng Group Co., Ltd.

Table 2.4-2 Exports of China's MSG by manufacturer, 2013

Table 2.4-3 Volume of MSG exported to the US by China's main MSG producers, Jan.-Aug.

2013

Table 2.6-1 Estimated valine production cost of Fufeng Group, 2012

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Table 2.6-2 Cost information of MSG production in Fufeng Group, 2010

Table 2.7-1 Financial situation of Fufeng Group Co., Ltd., 2012, USD

LIST OF FIGURES

Figure 2.3-1 Ex-works price of Fufeng Group Co., Ltd.'s xanthan gum, June 2012-Dec. 2013

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1 Shine Star (Hubei) Biological Engineering Co., Ltd.

1.1 Basic information

Name: Shine Star (Hubei) Biological Engineering Co., Ltd.

Address: No. 1, Yanjiang Road, Gong An, Jingzhou City, Hubei Province, China

Organization: Producer/manufacturer

Industry: Chemicals and materials

Website: http://www.shine-star.com.cn

Phone: 86-XXX

Fax: 86-XXX

Email: XXX

1.2 Company background

Content byte: Background information of Shine Star (Hubei) Biological Engineering Co., Ltd.

Shine Star (Hubei) Biological Engineering Co., Ltd. (Hubei Shine Star) which was established

in 2001 in Gong'an County, Hubei Province is a subsidiary company of Fosun Pharmaceutical

Group. The company is mainly engaged in the business of extracted amino acids currently. As

the largest producer of leucine by extraction method in China, it has a covering area of more

than 90,000 square meters and about 1,450 employees.

The company has obtained some certifications such as ISO 9001:2000, ISO 22000:2005, ISO

14001:2004, Kosher, Halal, and GMP.

Hubei Shine Star has established a long-term cooperation relationship with Nanjing University.

Now the company also works as an industrial base for post doctor.

In 2012, leucine output in Hubei Shine Star is 1,150 tonnes, with the capacity of 1,500 t/a.

There are no potential capacities for leucine in the company currently.

Content byte: Company background of Shine Star (Hubei) Biological Engineering Co., Ltd.

Shine Star (Hubei) Biological Engineering Co., Ltd. (Shine Star), established in 1996, is one of

the leading producers of amino acids extracted via hydrolysis method in China. In 2006, it was

merged by Shanghai Fosun Pharmaceutical (Group) Co., Ltd. Now it has more than 1,000

employees.

The company's amino acids, especially L-Arginine, L-Arginine hydrochloride monohydrate and

L-Cysteine hydrochloride monohydrate, enjoy a good reputation in domestic and overseas

market. Its amino acids meet the requirements of Ajinomoto Co., Inc., the United States

Pharmacopeia and the European Pharmacopoeia. It has also obtained some certifications

such as ISO 9001: 2000, ISO 14001:2004, Kosher, Halal, HACCP and American Institute of

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Baking.

Shine Star has established long-term cooperation relationships with Nanjing University and

other famous universities and institutes in China. And the company is the postdoctoral

industrial base and the enterprise technology center of Hubei Province. All these help

strengthen its leading position in hydrolysis amino acid industry.

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PS: Non-structured content bytes are shown by classification and order.

1.3 Production information

Table 1.3-1 Production information of Shine Star (Hubei) Biological Engineering Co., Ltd.

Product Year Capacity, t/a Output, tonne

Glucosamine 2002 *** ***

Glucosamine 2003 *** ***

L-Arginine 2010 *** ***

L-Arginine 2011 *** ***

L-Arginine 2012 *** ***

L-Arginine 2013 *** ***

L-Cysteine 2010 *** ***

L-Cysteine 2011 *** ***

L-Cysteine 2012 *** ***

L-Cysteine 2013 *** ***

L-Cysteine hydrochloride monohydrate 2006 2,000 ***

L-Cysteine hydrochloride monohydrate 2007 2,000 ***

L-Cysteine hydrochloride monohydrate 2008 *** ***






Leucine 2010 *** ***

Leucine 2011 *** ***

Leucine 2012 *** ***

L-tert-Leucine 2010 *** ***

Source: CCM

Content byte: L-arginine supply and producers in China

In China, the number of L-arginine producers is less than 10 currently. Among these L-Arginine

producers, Shine Star Hubei is the largest producer of L-Arginine by output in China at present.

Shine Star Hubei focuses on foreign market and most of its L-Arginine is for export. In 2011,

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the company's export volume of L-Arginine accounted for over 90% of its total output. However,

in 2012, Hubei Shine Star's output of L-Arginine decreased to about XXX tonnes, due to the

relocation.

Content byte: L-Arginine business in Shine Star (Hubei) Biological Engineering Co., Ltd.

► Production

The L-arginine capacity of Hubei Shine Star reaches about 1,100 t/a in Feb. 2012. Its output is

XXX tonnes in 2011, which is lower over 2010 because the company has set its L-arginine

production lines idle since late 2011.

► Technology

Hubei Shine Star has improved its hydrolysis method and obtained a patent on it (patent

number: 200510019915).

► Market sales

More than 60% of the L-arginine produced by Hubei Shine Star is exported to America, Europe

and so on every year, while there is only a small amount left for its regular downstream users

in China.

Content byte: Introduction of key threonine producers in China

Among these L-cysteine producers, Wuhan Grand Hoyo Co., Ltd. and Ningbo Haishuo

Biotechnology Co., Ltd. first produced L-Cycsteine in China.

Currently, Shine Star (Hubei) Biological Engineering Co., Ltd. (Shine Star Hubei) is the largest

L-Cysteine producer in China, with a capacity of 6,700 t/a. About 60% of the company's

L-Cysteine is for export.

Content byte: Major producers of leucine in China

At present, there are about 15 leucine producers in China. The output in these leucine

producers is quite small. Most of them produce less than 100 tonnes in 2011.

Among these leucine producers, Shine Star (Hubei) Biological Engineering Co., Ltd. (Hubei

Shine Star) is the largest supplier in China at present. Its output in 2011 is about XXX tonnes,

accounting for 44% of the total leucine output in China in 2011. Ningbo Haishuo Biotechnology

Co., Ltd. (Ningbo Haishuo) with the output of 530 tonnes, is the second largest supplier of

leucine in China in 2011.

Many producers adopted hydrolysis technology in leucine production, because of the lower

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cost compared with the fermentation technology.

Only a few producers such as Shanghai Ajinomoto Amino Acid Co., Ltd. (Shanghai Ajinomoto)

take fermentation as their major leucine production method. Their products are especially

exported to Central and West Asia, where the people have special request on leucine

production attributed to their religion, because these people considered the hydrolysis

production environment may offend their god—raw materials in leucine hydrolysis production

may include pig hair, which is abandoned to be used in Islam world.

Content byte: Hubei Shine Star stopped the glucosamine production in 2005

Hubei Shine Star disclosed that this company has stopped the GAH production only for several

months while in 2003 the company still produced GAH. They reveal the unstable supply of raw

material is the major reason for the change. They disclose that the company will probably not

produce GAH in future.



1.4 Import & Export

Table 1.4-1 Import & export situation of Shine Star (Hubei) Biological Engineering Co., Ltd.

Imp/Exp Year Volume, t Value, USD Price, USD/kg

Import 2005 *** *** ***

Export 2009 *** *** ***

Source: China Customs

1.5 Production registration

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subscribe it. CCM will provide the information within 15-25 workdays. The price and

submission time will be adjusted according to the specific content that you require us to supply.

1.6 Production cost

Content byte: Estimated manufacturing cost of Shine Star (Hubei) Biological Engineering Co.,

Ltd.

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Table 1.6-1 Estimated manufacturing cost of Hubei Shine Star, May 2012

Category Item

Unit price, USD/t

(USD/kWh)

Unit consumption,

t/t (kWh/t)

Unit cost,

USD/t Share, %

Direct

cost

Hair and feather *** *** *** ***

Main raw materials for

purification / / *** ***

Other raw materials / / *** ***

Water 0.26 *** 156.00 2.02

Electricity, kWh *** *** *** ***

Labor / / *** 2.41

Indirect

cost

Salary of management staff

and other auxiliary staff / / 67.00 0.87

Amortisation of fixed assets / / *** 2.87

Treatment of waste gas,

wastewater and waste

residue

/ / *** ***

Other costs / / 148.00 1.91

Total cost, USD/t *** 100.00

Source: CCM

Content byte: Estimated leucine production cost of Shine Star (Hubei) Biological Engineering

Co., Ltd., 2012

Table 1.6-2 Estimated leucine production cost of Hubei Shine Star, 2012

Category Item Unit price, USD/t

(USD/kWh)

Unit consumption,

t/t (kWh/t)

Unit cost,

USD/t Share, %

Direct

cost

Hair and feather *** *** *** ***


purification / / *** 19.07

Other raw materials / / *** ***

Water *** *** 156.00 1.95

Electricity *** *** *** ***

Labor / / 118.43 1.48

Indirect

cost


and other auxiliary staff / / *** 4.97

Amortisation of fixed assets / / *** 2.78

Treatment of waste gas,

waste water and waste

residue

/ / *** ***

Other costs / / 148.00 1.85

Total cost, USD/t *** 100

Source: CCM

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1.7 Financial information

Content byte: Financial situation of Shine Star (Hubei) Biological Engineering Co., Ltd., 2012,

USD

Table 1.7-1 Financial situation of Hubei Shine Star, 2012, USD

Revenue ***

Cost of sales ***

Distribution expenses ***

Administrative expenses ***

Financial costs ***

Business taxes and surcharges ***

Non-operating income ***

Non-operating expense ***

Total income ***

Total profit ***

Income tax expense ***

Net profit ***

Source: Hubei Shine Star

Content byte: Financial situation of leucine in Shine Star (Hubei) Biological Engineering Co.,

Ltd., 2012, USD

Table 1.7-2 Financial situation of leucine in Hubei Shine Star, 2012, USD

Revenue ***

Cost of sales ***



Financial costs ***

Business taxes and surcharges ***

Total profit ***


Net profit ***

Source: Hubei Shine Star



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1.8 Competitiveness analysis




1.9 Marketing and sale mode




1.10 R&D




1.11 Procurement




1.12 Company dynamics




1.13 Site visit




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2 Fufeng Group Co., Ltd.

2.1 Basic Information

Name: Fufeng Group Co., Ltd.

Address: Longshan Rd North, Junan County, Dongying City, Shandong Province, China

Organization: Producer/manufacturer

Industry: Food ingredients

Website: http://www.fufeng-group.com

Phone: 86-XXX

Fax: 86-XXX

Email: XXX

2.2 Company background

Content byte: Company background of Fufeng Group Co., Ltd.

Fufeng Group Co., Ltd. (Fufeng Group) is an international bio-product manufacturer listed on

the main board of the Hong Kong Stock Exchange (HKSE). It has four subsidiaries: Shandong

Fufeng Fermentation Co., Ltd., Baoji Fufeng Biotechnologies Co., Ltd., Inner Mongolia Fufeng

Biotechnologies Co., Ltd. and Jiangsu Shenhua Pharmaceutical Co., Ltd. The company has its

own research center: Fufeng R&D Center and a trading company: Fufeng Import and Export

Co., Ltd. Xanthan gum is manufactured in Shandong Fufeng Fermentation Co., Ltd. and Inner

Mongolia Fufeng Biotechnologies Co., Ltd.

Fufeng Group has been focusing on the processing and fermentation of corn starch for years.

It is the largest MSG and glutamic acid producer as well as one of the three largest xanthan

gum producers in the world. It also produces corn starch, corn oil, medicine and active

pharmaceutical ingredient. Fufeng Group's glutamic acid, MSG and xanthan gum cover the

whole China and over 40 foreign countries globally.

It has obtained the ISO 9001, ISO 22000 (HACCP), ISO 14001, OHSAS 18001 certifications,

along with GMP, Kosher and Halal certifications.

Content byte: Brief introduction of Shandong Fufeng

Fufeng Group Co., Ltd. (Fufeng Group) is an international bio-product manufacturer listed on

the main board of the Hong Kong Stock Exchange ("HKEx"). It specializes primarily in the

production, marketing and R&D of bio-fermentation products. It is also the largest MSG and

glutamic acid manufacture as well as the third largest xanthan gum producer in the world.

Fufeng Group is a conglomerate of the following enterprises: Shandong Fufeng Fermentation

Co., Ltd., Baoji Fufeng Biotechnologies Co., Ltd., Inner Mongolia Fufeng Biotechnologies Co.,

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Ltd., Jiangsu Shenhua Pharmaceutical Co., Ltd, Fufeng R&D Center and Fufeng Import and

Export Co., Ltd. Xanthan gum is manufactured in both Shandong Plant and Inner Mongolia

Plant.

It has also obtained the ISO 9001, ISO 22000 (HACCP), ISO14001, OHSAS18001

certifications, along with GMP, Kosher and Halal certifications. The markets for Fufeng

glutamic acid, MSG, and xanthan gum cover the whole China and over 40 foreign countries

globally.

Product range:

- Monosodium Glutamate (MSG)

- Glutamic acid

- Xanthan gum

- Corn starch sweetener

- Bio-fermentation fertilizer

- Corn oil

- Chicken powder

- More than 50 types of heath supplement products, including Cordycepin capsules,

Ganoderma Lucidum powder, Coriolus capsules, Coriolus Glycopeptide, Hericium, Armillaria

Mellea Preparation, Needle Mushroom Powder, Agaricus Blazei Murill (ABM) Powder ,Chinese

Wolfberry Polysaccharide and Hedgehog Hydnum Polysaccharide.



2.3 Production information

Table 2.3-1 Production information of Fufeng Group Co., Ltd.

Product Year Capacity, t/a Output, tonne

Glutamic acid 2008 *** ***






L-Valine 2011 *** ***

L-Valine 2012 *** ***

L-Valine 2013 *** ***

Monosodium glutamate 2007 *** ***





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Threonine 2009 12,000 ***

Threonine 2010 *** ***




Valine 2010 *** ***

Valine 2011 *** ***

Valine 2012 *** ***

Xanthan gum 2007 *** ***





Source: CCM

Content byte: Ex-works price of xanthan gum decreases substantially in 2013

The ex-works price of xanthan gum witnessed an obvious downtrend in 2013, especially

during H2 2013. For example, the ex-works price of xanthan gum of Fufeng Group Co., Ltd.

(Fufeng Group), a leading xanthan gum manufacturer with a capacity of around 50,000 t/a,

fluctuated at a relatively low level during H1 2013, according to data from CCM. The average

ex-works price decreased from USD5,190/t during H2 2012 to USD5,149/t during H1 2013.

Since then, Fufeng Group continued to decrease the price of xanthan gum to USDXXX/t in

Dec. 2013, down a significant 17% compared with that in June 2013, due to the downturn in

the market for xanthan gum.

Figure 2.3-1 Ex-works price of Fufeng Group Co., Ltd.'s xanthan gum, June 2012-Dec. 2013

Source: CCM

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Content byte: Main products of Fufeng Group

The main productions of Fufeng Group are as below:

Monosodium glutamate and xanthan gun (the production of them are the biggest in China)

Starch sugar

L-Isoleucine (the quotation in June 2013 is about USD21,840/t)

L-Valine (the quotation in June 2013 is about USD10,840/t)

L-Leucine (the quotation in June 2013 is about USD21,040/t)

L-Proline

Glutamic acid

Threonine



2.4 Import & Export

Table 2.4-1 Import & export situation of MSG in Fufeng Group Co., Ltd.

Imp/Exp Year Volume, t Value, USD Price, USD/kg

Export 2009 *** *** ***

Export 2008 *** *** ***

Import 2008 *** *** ***


Content byte: Exports of China's MSG by manufacturer, 2013

Table 2.4-2 Exports of China's MSG by manufacturer, 2013

No. Manufacturer

Total Exports to the US

Export

volume, t

Average export

price, USD/Kg

Export

volume, t

Average export

price, USD/Kg

1 Fufeng Group Co., Ltd. *** *** *** ***

2 Meihua Holdings Group Co.,

Ltd. *** *** *** ***

3 Shandong Linghua MSG

Incorporated Co., Ltd. *** *** *** ***

4 Henan Lotus Flower Gourmet

Powder Co., Ltd. *** *** *** ***

5 Ningxia EPPEN Biotech Co.,

Ltd. *** *** *** /


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Content byte: Volume of MSG exported to the US by China's main MSG producers, Jan.-Aug.

2013

Table 2.4-3 Volume of MSG exported to the US by China's main MSG producers, Jan.-Aug.

2013

Manufacturer Volume, t Proportion

Meihua Holdings Group Co., Ltd. *** 13.99%

Fufeng Group Co., Ltd. *** 2.64%

Henan Lotus Flower Gourmet Powder Co., Ltd. *** 14.25%

Shandong Linghua MSG Incorporated Co., Ltd. *** 15.28%

Shandong Qilu Monosodium Glutamate Group Co., Ltd. *** 3.76%

Note: Proportion refers to what percentage of the volume of MSG the US imported accounts for the manufacturer's

total export volume.




2.5 Production registration




2.6 Production cost

Content byte: Estimated valine production cost of Fufeng Group, 2012

Table 2.6-1 Estimated valine production cost of Fufeng Group, 2012

Category Item Unit price, USD/t

(USD/kWh)

Unit consumption,

t/t (kWh/t)

Unit cost,

USD/t Share, %

Direct

cost

Glucose *** *** *** ***


purification / / *** 8.29

Other raw materials / / *** 12.81

Water 1.24 *** *** 0.32

Electricity 0.06 *** *** 8.20

Gas / / *** ***

Labor / / *** 3.51

Indirect

cost


and other auxiliary staff / / *** 5.06

Amortisation of fixed assets for

main production equipment / / *** 5.01

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Amortisation of other fixed

assets / / 0.00 0.00

Treatment of waste gas, waste

water and waste residue / / *** 4.24

Other costs / / 163.72 1.49

Total cost, USD/t *** 100

Source: CCM

Content byte: Cost information of MSG production in Fufeng Group, 2010

Table 2.6-2 Cost information of MSG production in Fufeng Group, 2010

Content Cost value, USD/t Proportion, %

Corn *** 56.5

liquid ammonia *** 10.2

Sulphuric acid *** 1.3

Coal *** 11.2

Depreciation *** 4.2

Employee welfare *** 3.7

Others *** 12.9

Total *** 100.0

Source: CCM



2.7 Financial information

Content byte: Fufeng Group's gross profit grows significantly in 2013

On 18 March, 2014, Fufeng Group Co., Ltd. (Fufeng Group) released its 2013 annual report.

The report shows the company's revenue grew by 2.3% year on year in 2013, achieving

continuous growth in revenue for seven years (since 2007) with a compound annual growth

rate of 29.2%. Moreover, gross profits increased sharply in 2013, with 28.2% year-on-year

growth rate, as the xanthan gum business became a key profit pillar of the company.

In 2013, affected by a weak demand for xanthan gum and low import prices of guar gum (a

substitute of xanthan gum), the domestic xanthan gum market was in the doldrums. Even in

this scenario, Fufeng Group's xanthan gum witnessed YoY increase of 72.7% in gross profit in

2013. The growth was driven by a rise in both sales volume and average sales prices, of

23.8% and 10.1% year-on-year growth rate respectively. Most of Fufeng Group's xanthan gum

are sold to overseas markets. In May 2013, the US Department of Commerce imposed

dumping margins ranging from 15.09% to 154.07% on Chinese xanthan gum, leading to a

raise in Fufeng Group's xanthan gum export prices. Furthermore, increasing demand for

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xanthan gum from the oil and gas drilling industry helped Fufeng Group's xanthan gum exports

reach USD213.3 million in 2013, up 42.4% YoY. Fufeng Group produces food-grade and

industrial-grade xanthan gum, and is one of the world's largest producers.

In addition, Fufeng Group's high-end amino acids business, which includes valine, leucine,

isoleucine and glutamine, also performed well in 2013, selling approximately 2,406 tonnes and

realizing revenue of 146.0% year-on-year growth rate. High-end amino acid products, mainly

used in health care products and pharmaceuticals, are very profitable.

Content byte: Financial situation of Fufeng Group Co., Ltd., 2012, USD

Table 2.7-1 Financial situation of Fufeng Group Co., Ltd., 2012, USD

Revenue ***

Cost of sales ***



Financial costs ***

Non-operating income ***

Non-operating expense ***

Total income ***

Total profit ***


Net profit ***

Source: Fufeng Group



2.8 Competitiveness analysis

Content byte: Fufeng Group's advantages and disadvantages

Fufeng Group has advantage in researching, producing, product, sources, executing and

integrating, and has disadvantages in brand, marketing and decision-making.

Content byte: Power of brand of Fufeng Group Co., Ltd. is weaker

Power of brand of Fufeng Group is weaker. Fufeng Group has just started to largely promote

its MSG brand "Uo-Xian" since 2009, and invited the super star Ms. Zhaoyazhi as the image

agent for this brand. But the popularity of this brand is still limited till now.

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Content byte: Intention of Fufeng Group's industry integration in 2011

Fufeng Group's cost advantages

The intention of Fufeng Group's industry integration is expected to dominate MSG industry

gradually and then gain the price control on domestic MSG industry for gaining maximum

profits eventually. This intention may be very obvious to most people. However, the company's

competitive advantages backing up its integration plans may be not so explicit. Compared with

other large MSG producers, Fufeng Group can stand out for its great cost advantages.

Content byte: Fufeng Group's cost advantage from scale economy in 2011

Fufeng Group has unrivalled cost advantages from scale economy. Glutamic acid is the

precursor of MSG and only needs simply processing to become MSG. As the largest producer

of glutamic acid in the world, Fufeng Group can supply itself with glutamic acid with

high-quality but much lower prices thanks to the scale economy. According to the historical

statistics, the company's operation rate for both its glutamic acid and MSG production could

reach around 90% during 2007-2010, which meant the company could fulfill scale economy

very well. Furthermore, many small MSG producers in China can not produce glutamic acid

technically by themselves and need to purchase it from Fufeng Group. So Fufeng Group's

supply depletion of glutamic acid is expected to accelerate the shutting-down of these small

companies and promote the concentration of MSG capacity in China.

Content byte: Fufeng Group to face challenges for its MSG sales in 2011

It is quite reasonable to predict that Fufeng Group, the largest glutamic acid producer in the

world, will probably become one of the top MSG producers in the future. However, it should be

noticed that MSG, unlike glutamic acid, is a kind of end-use and fast-moving consumer goods

rather than chemical raw material. Facing public consumers, Fufeng Group is expected to put

much more weight on its brand establishment and promotion at home and abroad in the future.

After all, compared with the other two global MSG magnets, Ajinomoto Group (Japan) and

Meihua Group (China), who enjoy great brand recognition globally, it is expected that Fufeng

Group will have to promote its brand with intense competition.



2.9 Marketing and sale mode

Content byte: However, Fufeng Group just adopts the low-price strategy as an effective

method to seize market share within a short time

However, Fufeng Group just adopts the low-price strategy as an effective method to seize

market share within a short time. In the long run, it will not. If Fufeng Group has gained

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sufficient market share, it will raise its quotations in view of the gross profit margin of its

products. In accordance with Mr. Chen, the target overall gross profit margin of Xinjiang

Fufeng (including xanthan gum and minority amino acids) will be no less than 40% in 2013.

Content byte: Fufeng Group cooperates with Ajinomoto Group about threonine product

In March 2011, it's reported that Fufeng Group Limited (Fufeng Group) would cooperate with

Ajinomoto Group to produce threonine in OEM form, indicating that Fufeng Group would

supply threonine product to Ajinomoto Group, and meanwhile, the product quality of Fufeng

Group reached the standards of Ajinomoto Group completely. It's believed that this

cooperation, on one hand, can help Ajinomoto Group to expand Chinese market more easily;

on the other hand, Fufeng Group can digest its new capacity of threonine launched in H2 2010,

and raise its reputation of this product in the world.

CCM confirmed this news with Miss Wang, Assistant of Investor Relations of Fufeng Group.

She disclosed that Fufeng Group had already signed an agreement for this cooperation with

Ajinomoto Group, and more details will be provided in the company's annual report to some

out soon. Miss Wang didn't reveal whether this cooperation had already been executed now or

not.

Fufeng Group can get more benefits from this cooperation. It will help Fufeng Group to digest

its new capacity of threonine. In 2010, Fufeng Group's threonine production line succeeded in

putting into operation with capacity of 5,000t/a, and another 5,000 t/a capacity of threonine

production line began to construct in H2 2010, which is planned to be launched in H1 2011.

Thus, Fufeng Group possesses threonine production line with total capacity of 10,000 t/a in

2011. Obviously, Ajinomoto Group will be a large client of Fufeng Group's threonine product,

and if the cooperation lasts for a long time, the good performance of Fufeng Group's threonine

product will be ensured to some extent.

Besides, it will help Fufeng Group to gain better reputation of threonine product. Ajinomoto is a

famous brand in amino acid industry both in China and all over the world thanks to its good

product quality, and this cooperation actually indicates the product quality of threonine in

Fufeng can match with Ajinomoto Group, which is beneficial for Fufeng Group's better

reputation.

Content byte: Power of marketing of Fufeng Group Co., Ltd. is weaker

Power of marketing of Fufeng Group is weaker. Before 2009, Fufeng Group had a small

number of agencies because it was mainly engaged in MSG sales in bulk with various food

processors as its main clients. In order to enlarge its small-packing MSG market share in

domestic market, Fufeng Group started to largely cooperate with many agents from 2009, and

its agencies increased. The company also expected to expand its sales through further

increasing its agencies in various cities and online sales.

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2.10 R&D




2.11 Procurement




2.12 Company dynamics

Content byte: Dynamics of major MSG producers in China in recent three years

In order to avoid pollution problems and reduce cost in MSG production, some large MSG

producers in China plan to relocate their MSG production lines.

At present, Fufeng Group is the largest MSG producer in China, which has three production

sites for MSG: Shaanxi Province, Inner Mongolia Autonomous Region and Shandong Province.

Though the company has relatively mature technology for MSG production, its Shaanxi

production site is also involved in environmental issues, which was consequently laid idle for a

while in H2 2013 (production was restarted in Nov. 2013). In order to get rid of the pollution

problem, Fufeng Group plans to relocate the Shaanxi factory, which is estimated by the

company to be finished in 2016.

Meihua Group, the second largest MSG producer nationwide once had three production sites

for MSG: Hebei Province, Inner Mongolia and Xinjiang Uygur Autonomous Region. Production

lines of MSG with a combined capacity of 100,000 t/a in Hebei have been relocated to Xinjiang

during 2012-2013. Now the Hebei site is only for MSG package and trade.

Henan Lotus whose production site is located in Henan is going to cooperate with COFCO

Limited on a 100,000 t/a MSG project to authorise the latter to produce MSG in Heilongjiang.

Henan Lotus sells not only its own MSG but also purchases MSG for sale to meet its clients'

need.

In addition, almost all producers produce MSG along with other condiments (such as sauce

and granulated chicken bouillon) to meet market demand so as to maximum their share in the

condiment market.

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Content byte: MSG plant of Baoji Fufeng to be relocated

On 24 Jan., 2014, Fufeng Group Co., Ltd. (Fufeng Group), a global MSG producer with a MSG

capacity of 1 million t/a, announced that one of its subsidiaries, Baoji Fufeng Biotechnologies

Co., Ltd. (Baoji Fufeng), with a MSG capacity of 300,000 t/a, would be moved from Weibin

District, Baoji City, Shaanxi Province, to Caijiapo Economic & Technological Development

Zone, Baoji City. The original location of Baoji Fufeng is within the scope of urban planning.

On 16 Jan., 2014, Baoji Fufeng came to a preliminary agreement with the Caijiapo government,

which includes providing Baoji Fufeng with a 33.3 ha of land with a 50-year land use right as

well as some preferential taxation & refund.

The board of Fufeng Group estimated that the relocation of Baoji Fufeng would be fully

completed in 2016 while its production line of MSG would be moved to the new factory

gradually during 2014-2015, so Fufeng Group's capacity of MSG may decrease by 60,000 t/a

per year in Baoji base during 2014-2015. However, Fufeng Group said that they still can

maintain a MSG capacity of around 1 million t/a through the operation of production facilities in

other factories and rest facilities in Baoji factory before complete relocation.



2.13 Site visit

Content byte: Fufeng Group chooses Xinjiang because both the costs of coal and corn in

Xinjiang are quite low

CCM: As known, Xinjiang Uygur Autonomous Region (Xinjiang) is not a main production area

of corn in China, why did Fufeng Group set its fermentation base in this region?

Chen: We choose Xinjiang because both the costs of coal and corn in Xinjiang are quite low.

Fermentation products consume quantities of energy, coal in general. For example, the cost

from corn and coal in the production of xanthan gum is about 35% and 50% respectively (Note:

they were 39.5% and 31.4% respectively in H1 2012 as indicated in H1 2012 report of Fufeng

Group). On the surface, Shandong is an ideal production base of xanthan gum as it is a main

production province of corn in China where there are cities with ports, which makes it

advantageous in the supply of raw material and transportation. But the market price of coal in

Shandong is very high, about USD95/t on Oct. 17, 2012 while the ones in Xinjiang and Inner

Mongolia are just about USD16/t and USD40/t respectively. The low cost of coal can

absolutely make up the high transportation cost in Xinjiang and Inner Mongolia.

Besides, the market price of corn in Xinjiang is fairly low in China, at least lower than that in

Shandong. But the output of corn in Xinjiang is not large. If we set up our monosodium

glutamate (MSG) production lines (Fufeng Group owns 1,050,000 t/a capacity of MSG) in

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Xinjiang, the supply of corn will be insufficient, driving the market price of corn up. Then, we

can get no profit. Thereby, we just produce highly value-added products that don't consume

too much corn rather than conventional corn products.

What's more, companies in Xinjiang can enjoy more preferential policies than those in

Shandong. For instance, Xinjiang Fufeng can enjoy 15% corporate income tax in Xinjiang

while the tax rate is 25% in Shandong.



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Documents

Sample of Company Profile Service - cnchemicals.com Profile (Sample).pdf · Table 2.3-1 Production information of Fufeng Group Co., Ltd. Table 2.4-1 Import & export situation of MSG