October 14, 2003
China's Zhejiang Huayuan Group on The Way to Become the World's Largest Vitamin D3 Production Base
Until August this year, China's Zhejiang Huayuan Group has invested a total amount of RMB97 million in a high-risk investment to develop the techniques for producing vitamin D3. Huayuan has proprietary intellectual property rights in these techniques for the production of vitamin D3.
After the huge amount they have invested in research and development, they finally achieved their goal of producing vitamin D3 in a large-scale output, and China became the fourth country in the world to master the advanced techniques of producing this essential element for both human and animal use. The Group plans to expand its production capacity to be the world' largest producer in five years' time.
Vitamin D3 is an oil-soluble vitamin that is an essential element for human beings and animals to grow, develop, procreate, as well as sustain a healthy life. However, only a few developed countries are capable of producing this product, and the highly advanced production techniques have been the domain of producers in Switzerland, Germany and the Netherlands.
As a result, before Zhejiang Huayuan Group put into the production of vitamin D3, China had to depend totally on the imports of vitamin D3, which accounted for a total consumption of US$20 million per annum.
In early1996, although the Photochemistry Research Centre of the Chinese Academy of Sciences (CAS) had completed an initial stage of research and test on vitamin D3, they still required a huge amount of capital to continue their research. Under the help of the president of CAS, Mr. Lu Yongxiang, the Huayuan Group signed an agreement with the Photochemistry Research Centre, in order to joint-invest in the exploitation of the techniques for producing vitamin D3.
In the same year, the group spent around RMB30 million to purchase a 36-mu land (Remarks: 1 mu = 0.165 acre. Mu is a Chinese measurement unit.) in Beijing, so as to build a one-ton production capacity vitamin D3 base for facilitating the intermediate stage of research.
Both parties agreed to lay out RMB4.8 million to go ahead with the high-risk investment of vitaminD3 research. Out of this amount, RMB2.8 million is contributed by the Huayuan Group. As the development of intermediate stage of the research progressed, another RMB4 million has to put into the research, making the total investment as high as RMB8.8 million.
As no reward was guaranteed at that stage, both parties felt the tension of the high-risk investment. Nevertheless, CAS put an additional amount of RMB2 million into the research. In October 1997, the research fund has again exhausted, and the total investment has to be increased to RMB13.5 million.
During this period, the Huayuan Group faced with a dilemma of whether or not to continue with the research project. Rumors began to flood the market; some even speculated that the Huayuan Group would eventually be affected by the research project.
Despite these negative speculations, the CEO of the Group, Mr. Shao Qinxiang decided to bear with the pressure and continued to carry out the research. He said: "The traits of high technology are high investments, high risks and high returns. To boldly invest in the intermediate stage of the research, then the company can expect to achieve great rewards from the proprietary intellectual property rights of vitaminD3 production. In the event that we fail, we could always start anew until we succeed".
In September 1999, the intermediate stage of the vitamin D3 research finally succeeded. Under the support of CAS president, Mr. Lu Yongxiang, the proprietary intellectual property rights of this research was transferred to the Huayuan Group at RMB20 million in May 2000. A 6-ton vitamin D3 production line began to go into operation in China in August 2001.
This revolutionized the past situation where China relied solely upon imports of vitamin D3. In the past, foreign companies turned down China's request for transferring the vitamin D3 production techniques at low costs. However, after the announcement of the success, they made their way personally to the Huayuan Group, seeking cooperation in developing the techniques, as well as placing their orders for the product.
According to the general manager of Zhejiang Huayuan Group, Mr. Ma Huanzheng, the productivity of the vitamin D3 production has been improved to approximately 60%, with its purity reaching 95%. Its product quality is on par with overseas produced products or even surpasses their quality levels.
