On the development trend of China's feed industry

[ China Agricultural Machinery Industry News ] In the past two years, China's feed industry has been in a "hard battle." Some feed enterprises with extensive management, lack of cost control and risk resilience are suffering; the dominant enterprises are taking advantage of the opportunity to go around and the M&A strategy is in full swing. Saying goodbye to the "intermediate growth era" after the "high-speed growth era", how to adapt to the new survival rules has become the top priority of many enterprises.

On the development trend of China's feed industry

Liu Yongxing said

China is a big and good market in the world. If we don't work hard, we will be squeezed by others. Because China can't accommodate more than 10,000 feed mills in this market, we must eliminate 890% to form economies of scale.

After reading Wang Zhong:

From now on, it may not be eliminated 80%, but from the current 6,700, it is entirely possible to eliminate more than 3,000. However, about 6,700 of them are counted according to one production license. The weak feed enterprises have been eliminated and the weak group companies have been eliminated.

Liu Yongxing said

The United States is a mature market economy. They only have more than 50 feed mills. There are still six or seven thousand in China. This shows that China's feed industry is still in a time of heroism and is still in a good profit. It is estimated that after 10 years, China's feed enterprises will only have 1,200 left and right, which is an inevitable trend. Most of the 10 million tons of feed enterprises in South Korea sell 200,000 tons of plants. The scale is too small to survive. In Guangdong, there are 7 to 9 sales of more than 200,000 tons, and about 20,000 tons or more, and most of the small-scale feed plants have been eliminated. The scale and intensification of feed mills is an inevitable trend. We stand out from many private companies, not because the market is good, the conditions are good, but because we do not follow the trend, we have taken measures that should be taken, advancing in the face of adversity, and making achievements when others think it is impossible. Let's see what we should do when the market is weak. When the market is weak, we will abandon the pursuit of value and pursue relative share. For example, can the share increase from 5% to 8%? This is the same as swimming, you swim along the water. If you don't move, you can't explain hello. You can swim to the water to explain you. Therefore, when the market is weak, we must find more subjective reasons instead of complaining about the market. We can't change the market trend, we can only change ourselves.

After reading Wang Zhong:

The United States should have more than 50 feed mills, and more likely more than 50 business entities (groups) rather than production entities. I went to the United States and saw some feed mills. The scale is not very large. If a factory is 200,000 tons a year, the output of more than 50 feed mills is only over 10 million tons. It is not as good as a Henan province. Not big. I have verified that the number of feed mills in the United States is around 5,970.

In fact, there are many feed mills in the United States, many feed mills are still there, but no longer produce commercial feed, and some are rented by some cooperatives or farmers to make contract production. And more is that the feed mill itself is part of an industrialized enterprise, which is consumed by the farming units within its own group, such as the “Tyson” of the United States. This kind of scene is also very likely to occur in China. However, the proportion of individual industry chain companies may not be so large, and not so large. What I have learned is that about a quarter of the goods are now commercial feed, and the rest are industrialized.

Liu Yongxing said

The feed industry has lost its profits, and it is suitable for medium-scale production. It is suitable for the scale of 100,000 tons and 200,000 tons, but it is too small and has no benefit. If we can't form scale benefits relatively quickly, we can't form product advantages, management advantages, and technological advantages, and we can't reduce production costs. We will be squeezed by others. Therefore, we must be strong. This strength is in all aspects, technical, management, production, management, market, decision-making, and consciousness.

After reading Wang Zhong:

I consulted a US feed feed that used to work for the US Soybean Export Association. The main capacity of the US feed mill is mainly 120-200,000 tons. For some farming concentration areas in China, it is really dangerous if the full-price feed does not have a scale of more than 100,000 tons. In fact, the current poultry production is now almost the same, because China's poultry industry is still relatively mature. I very much agree with Mr. Liu Yongxing's point of view. The full price of the material factory is to scale, but to look at the system capability, compared to the efficiency of each link.

Liu Yongxing said

In the same factory, the investment of foreign-funded enterprises is 10 times that of ours, which is its Achilles heel. To survive, we must go the way of increasing revenues and expenditures, reducing costs, and raising rates, and taking the path of reducing costs. The emergence of production bottlenecks is to blindly increase people, increase equipment or improve work and rate, to be clear. For example, the 630 transformer can produce 10,000 tons at 80% effective efficiency with 20 hours of work per day. The pressure cooker 36A should trip at 50A, have we checked the low pressure switch. Another thing is that there must be accumulation, it is difficult to accumulate funds, and the losses are very fast.

After reading Wang Zhong:

Mr. Liu Yongxing is an efficiency expert and can even become a master. The company's cost management capabilities are recognized by the industry. In many so-called red sea areas, such as heavy chemicals, cement, etc., the East hopes to enter this, it will immediately reflect this efficiency. Therefore, they are not afraid to invest in the Red Sea. When they enter, they have eliminated many backward production capacity and enterprises.

Liu Yongxing said

Market competition is like a weak evolution of the biological evolution. If you are weak, you will be eliminated. Just like the sheep on the wasteland, the wolf comes to a strong and ran away, and the poor physical strength is eaten by the wolf. This looks very cruel, but very reasonable. If it is not, the offspring of the sheep will get worse. It is because of the existence of a wolf that the sheep will run faster and faster. The market competition is like this. Foreign companies entering China are helping China to eliminate the weak. In turn, we are stronger, and we must also eliminate the weak ones in foreign-funded enterprises, and ultimately the strong survive. Only by facing a strong hand can you learn good things.

After reading Wang Zhong:

In the early stage of the development of China's feed industry, foreign feed enterprises investing in China have obvious advantages, including technology accumulation, brand, quality control, etc., but the gross profit is very high. However, nowadays, foreign-funded enterprises have heavy investment in fixed assets, high management costs, and poor business flexibility, which has led many companies to retreat. Of course, companies like Zhengda have actively deployed downstream food terminals, increased investment in the industrial chain, and achieved a successful transformation, but instead gained a new competitive advantage. In addition, most foreign-funded enterprises are more compliant with national taxation, labor, and safety regulations, and are also responsible for high operating costs. However, as far as the current situation is concerned, in the competition, foreign-funded enterprises are likely to fall further.

Liu Yongxing said

Companies with strong vitality are full of sense of crisis. We are in a competitive era, you must be stronger and better, and you will not be crushed by others. As long as there is a market, there will be competition. As long as it is a market dominated by the demand side, this kind of competition will be very intense.

After reading Wang Zhong:

Competitiveness and the size of the company are not related. Of course, the enterprise with full price, hardware and scale are the basic conditions. According to our observations, many domestic feed enterprises are not small, but in reality they are very competitive, even including some group companies and several listed companies. In the period of great transformation of the industry, those large but not strong enterprises will still be eliminated or even eliminated.

Many feed mills in the world are very large. South Korea has 200,000 tons of plants. Chia Tai has 350,000 tons of plants in Vietnam. If such a plant appears in China, it will shut down a large number of small factories. At present, the 3,000-ton/month plant in North China can survive, and it will not work in the future. We now have to work hard on 8,000 tons of 8,000 tons. According to my and some experts' predictions, China's current feed mills will close down 80%, and feed mills with monthly sales below 3,000 tons will definitely close down.

After reading Wang Zhong:

I have been to some factories in Vietnam. The scales of Zhengda and Cargill are very large. The scale of Chinese-funded enterprises such as Tongwei and Hope is also very large. The starting point is high. In fact, it is higher than the domestic starting point. In the backward Vietnam, it faced national competition from the beginning and was the arena of international predators. China is different, and China's national feed industry has completely occupied the commanding heights of competition.

In addition, looking at the development of an industry, not all of them are based on Western countries. The Chinese market does have its particularity. This particularity is determined by China's national conditions and its ruling philosophy. Judging the development of China's feed industry, developed countries in Europe and America have certain reference significance, but only a comprehensive analysis based on China's perspective, the height of the world and the background of China's pluralism can see a clearer trend.