Promoting High-Quality Development of the Industrial Chain: Venture Capital Record | Aijin Group Enters the "Fast Lane" of Green Development in Harmony with Capital

Pesticides are a small industry, but they play a very important foundational and protective role in the national economy and people's livelihoods. Jiangsu Aijin Crop Technology Group Co., Ltd. (referred to as "Aijin Group") has focused on pesticide formulations for nearly 20 years, aiming to become a leading enterprise in the manufacturing and service of green pesticide formulations. After twenty years of honing, Aijin Group's focus has finally been recognized by capital, and with comprehensive empowerment from capital, it will accumulate strength and contribute more green momentum to the "Belt and Road".

　　Focusing on pesticide formulations for nearly 20 years, sowing green on the "Belt and Road".

In 2001, China officially joined the World Trade Organization (WTO), opening a golden era of rapid development.

Two years later, coinciding with the restructuring of the Jiangsu Pesticide Research Institute, Zhang Shenwei, who had worked there for about 20 years, chose to start a business with several colleagues. At that time, five people raised 500,000 yuan to establish Nanjing Aisen Fine Chemical Co., Ltd. (currently a subsidiary of Aijin Group).

"Pesticides should be an essential input for ensuring food security," Zhang Shenwei said. According to incomplete statistics, the scientific use of pesticides in China reduces food loss by at least enough to feed 300 million people each year.

From the perspective of the industrial chain, pesticides can be divided into two links: active ingredients and formulations. The active ingredients are the effective components of pesticides, prepared from various pesticide intermediates and basic chemical products through chemical synthesis or other technologies, but cannot be directly applied to agricultural production. Formulations are products developed, compounded, processed, and produced based on active ingredients, with the addition of dispersants and co-solvents, and are directly applied to agricultural production.

The roles of active ingredients and formulations are different. Facing the entrepreneurial environment at that time, Zhang Shenwei's team chose to focus on formulations because they required relatively less investment and were easier to succeed.

After determining the strategic positioning of making formulations, Aijin has persisted for nearly 20 years, and the company's market position has steadily improved. According to the national pesticide industry formulation sales ranking, Aijin Group ranked 12th in 2020 and rose to 8th in 2021.

"The initial investment in making formulations was not very high, but it is actually very difficult to do it well. Because it is consumer-oriented, getting consumers to recognize it is really hard work, and this process is long, 'nurturing things quietly,'" Zhang Shenwei said. "Meeting customer needs and growing together with customers is our consistent pursuit."

To meet customer needs, Aijin Group places great importance on technological research and development. The formulation research center is dedicated to the research of green, environmentally friendly, and intelligent slow-release pesticides, and currently has a mature and experienced R&D team. The company holds 13 invention patents and collaborates with several universities and research institutes for joint R&D. In terms of product quality, it directly benchmarks against multinational companies.

Due to the product quality reaching the level of multinational companies, and in some aspects even surpassing it, along with comprehensive cost advantages, Aijin Group's products are distributed across Central Asia, Southeast Asia, Africa, South America, and other countries and regions along the "Belt and Road," with exports accounting for about 70%.

It is not enough for products to merely exhibit their intended functions; Aijin Group also consistently adheres to the concept of green and environmental protection, aspiring to become a leading enterprise in the manufacturing and service of green pesticide formulations. The company designs products, researches formulations, and tests application environments according to green plant protection methods. It must ensure that plants can grow healthily, guarantee the quality and safety of agricultural products, and ensure safety for the environment during use. Since its establishment, Aijin has never been penalized for environmental issues.

"We are engaged in pesticide formulations, but we set our standards according to the requirements of the Good Manufacturing Practice (GMP), raising our own standards," Zhang Shenwei stated.

　　Comprehensive capital empowerment helps enterprises gain an advantage in changing circumstances.

With the mission of "helping global agriculture increase production and income to improve the quality of life for people around the world," Aijin Group has achieved some results, but the company has not stopped.

China's pesticide industry started in the 1950s and 1960s, and after years of development, it has become the world's largest producer and exporter of pesticides. Although China's overall pesticide output ranks among the top in the world, the industry concentration is low. With intensified industry competition and increased environmental protection pressure, China's pesticide industry is entering a new round of consolidation, and the industry's concentration is expected to further increase in the future.

In fact, the original drug sector of China's pesticide industry has already begun to differentiate and increase concentration. Better original drug companies are moving towards the capital market, with strong financing capabilities and continuous increases in development investment, leading to stronger competitiveness. Currently, there are more than 1,000 pesticide formulation companies in China, which are slightly lagging in differentiation, but the trend of differentiation and increased concentration in the industry is inevitable. During the process of industry differentiation, companies in the industrial chain face a severe test: either grow or be eliminated or merged.

Against this backdrop, Aijin Group, which has focused on pesticide formulations for nearly 20 years, is determined to grow quickly, which requires various resources, including capital. In 2021, Aijin Group introduced capital partners such as Nanjing Innovation Investment Group.

"Receiving the attention and investment of the government guidance fund has made us feel that the business environment in Nanjing is warm, and it has greatly enhanced our entire team's confidence in starting a second venture," Zhang Shenwei said. In addition to financial assistance, Nanjing Innovation Investment Group continuously empowers the company in multiple aspects.

As we all know, small and medium-sized private enterprises face difficulties in financing. Before Nanjing Innovation Investment Group officially invested, Aijin Group's overall bank credit limit was not high, which limited its capacity expansion. Due to the impact of the pandemic, shipping costs have remained high, coupled with exchange rate fluctuations, Aijin Group's overall funds have been relatively tight.

After Nanjing Innovation Investment Group engaged with Aijin Group, during the agreement signing process, some banks had already increased their credit limits for Aijin Group. After signing the agreement, other banks also increased Aijin Group's credit limits with a loan-investment linkage approach. It is reported that three banks collectively increased Aijin Group's credit limit by about 140 million yuan. This funding will help meet Aijin Group's financial needs in the coming years, facilitate the company to strengthen R&D, expand production capacity, and even prepare "ammunition" for possible acquisitions.

In addition to significantly enhancing the company's financing capabilities, the empowerment from Nanjing Innovation Investment Group is also reflected in further upgrading corporate compliance. "Our due diligence took a relatively long time, and we found that Aijin Group is generally quite compliant," said a relevant person from Nanjing Innovation Investment Group. After Nanjing Innovation Investment Group's investment, Aijin Group's compliance requirements were further enhanced, and Nanjing Innovation Investment Group also dispatched directors to assist the company in compliant operations, preparing for standardization ahead of entering the capital market.

In addition, Nanjing Innovation Investment Group also helped Aijin Group connect with its sub-funds and industrial funds, such as the Houxin Jiantou Fund under New Hope and the Provincial Agricultural Reclamation Fund, providing industrial support beyond funding for the company. Nanjing Innovation Investment Group also strengthened cooperation and linkage between Aijin Group and other invested enterprises, such as assisting the company in joint R&D with Tuogong Drones on plant protection applications; and expanding overseas markets for plant nutrient agents with Xuankai Bio.

Today, Aijin Group's main business includes the research and development, manufacturing, and domestic and international trade sales of green plant protection products, as well as high-end rice from Aijin Rice Garden, green agricultural technology, and pest control services. In 2021, Aijin Group's sales revenue exceeded 1.2 billion yuan, with a team of over 400 people.

In the future, the market demand for the pesticide industry will continue to grow steadily. On one hand, pesticides can ensure national food security with limited arable land; on the other hand, countries with a significant agricultural proportion in the "Belt and Road" initiative will also become regions for pesticide export growth. With the support of capital, Aijin Group, which has focused on agricultural technology for nearly 20 years, will surely accelerate its development pace and add more green momentum to the "Belt and Road".