Current Situation of Competition in Plant Extract Industry

In recent years, with the increasing recognition of "return to nature" and "green consumption", natural health care products have been respected around the world, and traditional medicines have also received special attention and recognition. As the main raw materials of food, health products, cosmetics and botanical products, plant extracts have become the star of the natural medicine and health products market, showing strong growth momentum in the global market.

According to the statistics of the National Bureau of Statistics, in 2016, there were 61 enterprises above designated size in my country's plant extract industry; the sales revenue was 20.167 billion yuan, a year-on-year increase of 18.35%; the product sales profit was 3.416 billion yuan, a year-on-year increase of 30.30%; the total profit was 21.09% 100 million yuan, a year-on-year increase of 28.09%.

Chart 1: 2015-2016 plant extract industry operating benefit analysis (unit: household, ten thousand yuan, %)

Source: Compiled by Qianzhan Industry Research Institute

After years of rapid development, my country's plant extract industry has met the requirements of the international market in terms of production technology and product quality inspection methods. According to the statistics of the China Chamber of Commerce for Import and Export of Medicines and Health Products, from 2010 to 2015, the export scale of my country's plant extracts showed an increasing trend year by year. In 2016, the export scale of my country's plant extracts shrank, down 10.93% year-on-year, and the export value reached 1.93 billion US dollars.

Chart 2: Changes in the export value of plant extracts from 2010 to 2017 (unit: USD 100 million)

Source: Compiled by Qianzhan Industry Research Institute

However, from the above data, it can be seen that my country's plant extract industry is an emerging industry, and most companies have small investment scale. According to the statistics of the "2018-2023 China Plant Extract Industry Production and Marketing Demand and Investment Forecast Analysis Report" by the Prospective Industry Research Institute, 87% of the enterprises have a scale of less than 5 million, and the level of technology and management is low.

Chart 3: Competitive Landscape of Chinese Plant Extract Market (Unit: %)

Source: Compiled by Qianzhan Industry Research Institute

Specifically, companies in the industry generally have the following types: natural pigment companies, health food companies, vegetable oil refining companies, bioengineering companies, and scientific research institutions. Enterprises in the industry are generally young. Nearly 70% of enterprises have been engaged in plant extract business since 2001, and the plant extract business of nearly 50% of enterprises accounts for more than 80% of the overall business.

However, with the elimination of a number of poorly managed and operated enterprises, the concentration of the plant extract industry has increased, and a number of advantageous enterprises that can directly participate in international competition have emerged. These advantageous enterprises generally have the following commonalities: they are at the leading level in terms of extraction technology, quality and output, and have the ability to process a variety of products; they have established their own raw material bases, which can control the quality of raw materials and realize the integration from raw materials to finished products. ; There are fixed customer groups in the international market, with a certain reputation; with strong research and development strength.

Figure 4: Major manufacturers of plant extracts in China

Source: Compiled by Qianzhan Industry Research Institute

Geographically, Shaanxi, Hunan and Sichuan are the three main producing areas of plant extracts in my country. The plant extraction industry in these three provinces started early, and the medicinal plant resources are relatively rich, and they have formed a certain scale advantage. Plant extracts in Jiangsu, Zhejiang, Guangdong and Henan regions have also achieved good development in recent years.

Competitive trends in plant extracts

In terms of international competition, the international market will continue to raise the entry barriers for plant extract suppliers. The United States will further standardize and manage dietary supplements, and issue GMP management specifications for dietary supplements, which puts forward higher requirements for plant extract suppliers. In such a big environment, relevant enterprises can only take a place in the fierce market competition only by doing a good job in product research and development and production on the basis of norms.

In the domestic market, in my country's plant extract industry, joint ventures account for a large proportion, and the competitors of local companies are multinational companies with very strong scale, technology and financial strength. At the same time, countries around the world have implemented trade protection policies one after another, and various technical trade barriers have emerged one after another. The low-cost competition of Chinese enterprises is no longer dominant, and the competitive advantage has shifted to relying on technological progress and brand operation. Products and services will be an important means for enterprises to deal with technical trade barriers and remain invincible in the fierce competition.

In general, as a product with rigid demand, many countries in the world, including major economies, have strong demand for plant extracts. Coupled with the opening of China's huge potential health care product market, the inherent driving force of the plant extract market is very strong. With the simultaneous pull of the domestic market and foreign markets, the future development prospects of the plant extract industry can be expected. Foresight predicts that the industry will continue to maintain a state of rapid development, and the industry scale will exceed 34.1 billion yuan by 2023. Domestic enterprises need to seize the development opportunities and continuously improve their market competitiveness in order to gain a share in the fierce competition.

Chart 5: 2017-2022 China Plant Extract Industry Market Scale Forecast (Unit: 100 million yuan)

Source: Compiled by Qianzhan Industry Research Institute

The above data and analysis are from the "2018-2023 China Plant Extract Industry Production and Marketing Demand and Investment Forecast Analysis Report" released by the Prospective Industry Research Institute.