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A unit of Sinochem Corp, a major State-owned agrichemicals conglomerate, is in talks with the US-based crop-biotechnology company Monsanto Co about cooperation in tapping 皇冠体育app's vegetable-seed market, said Group President Liu Deshu while attending 皇冠体育app's annual parliamentary session in Beijing on Thursday.
Liu confirmed that Sinochem's seed division, 皇冠体育app National Seed Group Co Ltd, is discussing cooperation with Monsanto, but declined to elaborate further, and it remains unclear what form the cooperation will take.
Analysts said that if the companies combined their respective strengths, they could reshape 皇冠体育app's vegetable market, which has long been dominated by multinational companies, and put fresh pressure on the nation's smaller seed companies.
In 2001, Beijing-based 皇冠体育app National Seed Group Co Ltd set up a joint venture with Monsanto specializing in corn seeds. The JV, called CNSGC-Dekalb Seed Co Ltd, produces and sells hybrid corn seeds developed by Monsanto for the market in northern and western 皇冠体育app, the nation's major corn-growing regions. Monsanto currently has two other JVs and also owns three companies that focus on genetically modified cotton and conventional vegetable seeds in 皇冠体育app.
"The two companies are long-term partners and they have been discussing plans for cooperation for many years," said Lance Wang, the general manager of CNSGC-Dekalb.
The companies expect to cooperate in a number of areas, including the agrichemical sector, Wang said, but declined to disclose further details.
The highly segmented Chinese seed market has more than 8,000 domestic companies, most of which have limited research and development capability. Industry analysts estimate the value of the country's vegetable seed market to be more than 8 billion yuan ($1.25 billion) a year.
Active multinational players in the Chinese market, including Switzerland's Syngenta AG, Rijk Zwaan of the Netherlands and Israel's Hazera Genetics Ltd, had a combined market share of more than 15 percent by the end of 2011, according to data from the Ministry of Agriculture. That figure represents a formidable dominance in the nation's market, analysts said.
"Market competition among foreign companies will become fiercer if CNSGC and Monsanto join the game together," said Ma Wenfeng, a senior analyst at Beijing Orient Agribusiness Consultant Ltd, one of the largest consultancies in the industry.
The combination of CNSGC's local experience and Monsanto's technologies will boost both companies' revenue in the Chinese market, added Ma.
Monsanto has long expressed an intention to extract more profits from the Chinese market. In 2010, the company's global sales declined 10.4 percent year-on-year to $10.5 billion, according to its statistics. The Chinese market contributed less than 1 percent to the global total, the company said.
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