FEED Business Worldwide - December 1, 2011
Singao: An export-oriented, R&D driven supplier of natural livestock supplements
by David LIN
Singao has firmly established its lucrative niche as a China-based, export-oriented high-end supplier of natural livestock supplements. Like many other successful enterprises, Singao's development path was made smooth by the fact that its founder overcame professional challenges prior to starting up this company. Lai Zhouwen, Singao's Managing Director, belongs to China's first batch of foreign veterinary science Ph.D candidates. In 1993, he went to New Zealand, returned to China in 1998, and established Singao Company Limited five years later.
In the half decade between his graduation and Singao's founding, Lai's career path, while not smooth, was highly both challenging and educational, giving him deep knowledge and experience in all aspects of livestock farming. He freely admits that in his first few years after graduating and return to China, he had no clear career direction. Besides trading, Lai tried his hand at rearing pigs, cows and rabbits.
He only found his direction in 2003 when he went Thailand to attend the VIV exhibition programme. There Lai discovered the natural additive sodium butyrate, which did not exist in China back then. Through the help of his neighbour, a professor at Xiamen University's Department of Chemistry, successful experiments were carried out. In July, sodium butyrate was manufactured and tested on three pig farms in Xiamen, producing excellent results.
Since then, Xiamen-based Singao Company Ltd. has grown rapidly. Its Longyan-based subsidiary, Singao Biotech Company, is currently the largest in scale and most advanced high-energy microencapsulated fats deep processing facility in China. It has also grown far beyond its Chinese home base, with Singao products exported to as far as the European Union.
Food grade facilities and raw materials to ensure product quality
During Feed Business Worldwide's visit to Longyan Singao Biotech Company in the industrial zone of Miaoqian town, Liancheng county, Lai introduced the company's three main types of products: Ding su (sodium butyrate), Lipo su (omega 3 oil), Cal su (calcium butyrate) and MCT (median chain triglycerides). These are the pioneer animal fatty acids nutrition products in China's vast livestock market.
"Main ingredients of Ding su (for pigs) include sodium butyrate, butyrin (or estered butyrate), bacillus, butyrinum, and other fermentation materials," said Lai. Sodium butyrate is a natural substance present in maternal milk, and helps to enhance the appetite of mammals, increases feed intake and results in enhanced weight gain.
In addition to being an energy source for intestinal epithelial cells, sodium butyrate also enhances the growth and repair of intestinal villi, inhibits enteritis, and promotes the production of intestinal bacteria. In addition to its use in hogs, Lai added that, "Ding su is also used in products for poultry."
Complimenting the natural, nutrition-based approach of Ding su is Lipo su. According to Lai, "Lipo su, a micro-encapsulated, water-soluble omega 3 fish oil, uses corn syrup and casein as gell wall material, with emulsified omega 3 fish oil droplets at its core." It is the first micro-encapsulated fatty acid supplement in the Chinese market. In addition, the size of Lipo su's emulsified oil droplets is similar to that of omega 3 oil found in maternal milk fat. This helps to improves Lipo su's lipid digestibility in young and lactating animals.
However, if Lipo su provides essential fatty acids not found in unsupplemented feeds, their medium chain triglyceride product (MCT) acts as an alternative to traditional antibiotic growth promoter (AGP) supplementation of livestock diets. Produced in microencapsulated form just like Lipo su, Lai believes that MCT will play an important role in replacing AGPs in coming years. Alongside its antibiotic-like discouragement of pathogen growth, MCT is easily digested and metabolised, making it an ideal livestock energy source.
Despite having operated for three years, Singao Biotech's facilities look new. As Lai explained, all production facilities are made from food-grade stainless steel. Similarly, all raw materials used to manufacture supplements are either food grade or pharmaceutical grade, and thereby fit for even human consumption.
At a time when food safety issues are hindering food exports and livestock supplements, the quality of Singao supplements' raw inputs gives China's livestock producers an important means of reassuring consumers and end-users.
Indeed, Lai's confidence in the quality of Singao supplements' raw inputs even extends to his personal use: He added that, "I often have to attend trade shows in different parts of the world. Inevitably, whenever stomach problems arise because of food or other issues, I will take a little of Ding su since it's good for the stomach."
Export-oriented from the very beginning
But Singao is more than a large Chinese supplement producer with an overseas presence: Within a year of its 2003 founding, the company was already export-oriented: In early 2004, the first batch of Ding su was exported to Taiwan. By July of the same year, Singao's supplements were being exported to the European Union.
Currently, Ding su is exported to more than 30 countries and regions, including the EU, Taiwan, Malaysia, Indonesia, Thailand, Vietnam, and Turkey. With reference to the fact that Singao's products were exported overseas at such an early stage of the company's history, Lai explained that it was related to China's market circumstances at that time.
Due to Chinese livestock farmers' lack of awareness about AGP alternatives in the mid 2000s, it was more cost-effective for a small company like Singao to promote sodium butyrate as a lot of resources were required due to lack of product awareness in the domestic market. For this reason, Singao became export-oriented firm from the very beginning.
In 2004, Lai personally brought samples to a VIV exhibition held in the Netherlands. After he returned, he received an order from an important client. To date, this client remains his major client, and has been very satisfied with Singao's products' quality. This is in line with Singao's belief in being a "big brand" despite being a small enterprise.
Indeed, Singao's early export-driven orientation was actually a blessing in disguise: Because markets such as the EU are highly competitive and have high regulatory standards for livestock supplements, exports ensured that Singao's products complied with the world's highest feed, livestock and food safety requirements right from the company's founding onwards.
Rising demand drives building of new production capacity
At this time, with demand for the company's products growing rapidly both in China and overseas, it has no choice but build new production capacity. Construction works for expansion of Singao's production base is currently in progress. According to Lai, after expansion, the production capacity of Singao's three main products will be 10,000 tonnes per year, making possible the generation of RMB300 million (US$47 million) in annual sales.
According to Lai, the building of new capacity is driven by Chinese livestock farmers' rising awareness of the benefits of sodium butyrate, medium chain triglycerides and essential fatty acids for animal nutrition. As awareness of their benefits became more widespread, demand for Singao's products jumped accordingly.
Lai observed that in China, development of domestic fatty acid nutrition solutions must undergo four stages. "First is the introduction of the concept of butyrate salts. Second is promotion of an ideal fatty acids profile and its use in the fields of animal nutrition and health. Third, the replacement of antibiotic growth promoters (AGP). The fourth and last stage is rising awareness of the benefits of livestock products enriched with Omega 3," explained Lai.
"At the moment, the market has just entered the second stage [where awareness of essential fatty acids increases]. As awareness continues to rise, the rate of increase in demand for sodium butyrate is now in a healthy growth stage," Lai said.
"Furthermore, environmental protection measures, which includes the substitution of butyrate salts and other fatty acids in place of antibiotics used in livestock, creates many opportunities and makes it necessary for Singao to expand production. If Singao is unable to become the world's largest fatty acids manufacturer, its aim will be to become an internationally renowned manufacturer of fatty acids."
Of course, industry competition is also growing amidst increasing awareness. With regards to this, Lai insisted on winning through consistency in product quality and continuous technological innovation.
To keep its technological lead over competitors, Singao cooperates with China Agricultural University, Nanjing Agricultural University, Fujian Agricultural and Forestry University, and the Chinese Academy of Agricultural Sciences in conducting technical research. At this time, current research on sodium butyrate in China is conducted primarily by Singao. Singao is accredited a certificate of "Xiamen Hi-tech Torch", and its Ding su and Lipo su supplements have been granted national patents. All these measures help it both win and maintain the loyalty of large, high-end agribusiness clients.
Going forward, Lai has defined the challenge required to keep Singao company at the leading edge of Chinese livestock supplement suppliers: It must continue to offer superior products of higher quality at a competitive price. With its rising production capacity and high demand creating the scale economies to keep unit costs low, its efficient production is already complimented by an extensive, well-developed R&D infrastructure.
For all these reasons, Singao is confident that future successes will exceed the accomplishments of its short, yet bright history. Whether in its export-oriented compliance with developing country livestock supplement standards, well-developed R&D network or economically competitive manufacturing base, Singao remains true to its mission of delivering cost effective products and exceeding customers' expectations.
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