China difficult for trading houses to conquer

If the largest potato-producing country in the world wants to double production, you don't have to tell Dutch entrepreneurs that there are opportunities. Processors, machine builders and consultants are doing good business in it China, although this sometimes requires a considerable amount of learning costs. It remains difficult for breeders to get their revenue model working, especially because the Chinese have traditionally not been so concerned about plant breeder's rights and therefore miss out on income from royalties.

Plant breeders' rights
"But the attitude towards intellectual property is changing," notes China expert Epi Postma, who works as an independent consultant for various companies in the food and agribusiness. "While the word 'copyright' used to be laughingly interpreted by the Chinese as 'right to copy', it is now being treated more and more seriously."

"That was inevitable. Every year, 8 million Chinese complete an academic education and approximately 50% of all applications for intellectual property come from China itself. This is triggering a change in mentality, which is also supported by legislation You also see more attention for plant breeder's rights in the breeding sector and that stimulates the interest of Dutch breeders."

Frites gives you something to hold on to
Gerard Backx, director of HZPC, agrees that there are some changes in a positive sense, but is more reserved. Until recently, the breeding company and trading house was one of the few Dutch players to enter the Chinese market. The company knows better than anyone what can happen if a breed goes wild. During its first steps into the Chinese market, HZPC introduced the Favorita variety, which grew into the largest variety in China (and perhaps in the world). An unprecedented success, if it were not for the fact that almost not a single euro flowed back to the Netherlands.

The trading house now focuses mainly on cooperation with the processing industry. Not directly, but with local partners who take care of the propagation. It is still the only way foreign companies are allowed to do business in the country. "HZPC's ambitions to become active in propagation itself are necessarily on the back burner," Backx said.

Reliable partners
In addition to chip varieties, the trading company is also active in table potatoes. "The fresh market is more difficult, because it is less transparent," says Backx. HZPC has a permanent employee in the person of Ton Frijters who deals full-time with China and is often active in the country. According to Backx, the success of the activities in China depends on finding reliable partners. "We want partners who are morally and financially correct. Cultures still differ; you have to be careful, especially if multiple shareholders are involved in 1 company."

Backx does not have too many illusions in the field of plant breeders' rights. "Yes, I see change, but the right was already recognized in 2002. The supervision of plant breeders' rights remains a weak part for the time being. We regularly have discussions with the Chinese government through Plantum, in particular to ensure that attention continues to be paid to this. That is the big difference between the industry and machine builders. As breeders, we need more patience. It took years before we could build up a healthy cash flow."

More breeders
Other breeders are now also trying their luck on the Chinese market. For example, Epi Postma is active for Royal ZAP and Semagri, which responds to the need for varieties with a high starch yield for the growing starch industry. Through a project supported by the Dutch government, several varieties from the trading company have been propagated in China for several years.

This is done in partnership with the Chinese Beidahuang Potato Group, a starch integration with 3 times the size of Avebe. There is also support from other parties in the Netherlands, such as Eurofins and WUR. In addition to varieties, there is a need for agronomic knowledge to make cultivation a success. Breeder C. Meijer is also active in China, but director Johan van der Stee does not feel the need to share what the company focuses on. "We are closed about that."

China is not standing still
Of course, China is also not standing still when it comes to developing new varieties. Breeding is mainly done at state-owned companies that invest heavily in knowledge, according to inquiries from WUR. "WUR is not directly involved in the breeding work, but there are Chinese workers who have received training or done research here," says Ronald Hutten, potato breeding specialist at WUR. "There is sometimes cooperation, but that is not structural."

Hutten has no insight into the progress of Chinese breeding work, but does know that it is extensive. "There are institutes that assess more seedlings than HZPC and Agrico combined."