CJ CheilJedang's nucleic acid is soaring high on the strength of China’s economic growth
- After dominating the world's largest nucleic acid market in China, CJ CheilJedang has solidified the No.1 position in the global market, widening its lead with preemptive expansion.
- China’s economy has grown more than 6% in the first quarter of 2019, with its food industry also showing growth; the demand for nucleic acid is exhibiting a steadily rising trend.
- Possessing competitive R&D and production capabilities, CJ CheilJedang is overwhelming its competitors with the adoption of differentiated technology marketing
CJ CheilJedang, having dominated the world’s largest nucleic acid market in China, is on a fast track to becoming the world's leading green bio company. The global market for nucleic acid, which has been drawing attention of late as a high value-added product, has about two-thirds of it located in China. Based on its overwhelming competitive edge, CJ CheilJedang has widened the gap in market share (production volume basis) with its competition by more than double, solidifying its unrivaled leading position not only in the Chinese market but also in the global market, which is estimated to be worth KRW 600 billion per year.
Nucleic acid (Nucleotides) is a seasoning ingredient that adds flavor to food. Not only is nucleic acid used in seasonings and sauces to give them a savory flavor, but it is also added to processed foods to harmonize the flavors of their original ingredients. Among the variety of products on the global green bio market, nucleic acid used to receive as much attention as amino acids for feed such as lysine and tryptophan. Recently, however, it has been gaining a lot of attention as a cash cow with high growth potential and high profitability.
CJ CheilJedang plans to respond to the expected increase in demand by expanding its production bases in step with the growth of China’s food industry, which is attributable to the country’s economic growth. China's gross domestic product for the first quarter of 2019, having recently been published, is 6.4 percent, which exceeds forecasts. In particular, along with China’s economic growth, Chinese food companies are becoming larger and more advanced, and the food service market is also growing in tandem. As a result, the demand for nucleic acid, a seasoning ingredient, is continuously increasing.
Going beyond continuously increasing its market share based on its already overwhelming supply capacity, CJ CheilJedang has embarked on an effort to expand its production capacity as well. After expanding its production capacity by 10,000 tons, reflecting the three production sites in China and in Indonesia, at the end of last year, the company has also recently begun an effort to increase its production capacity by an additional 10,000 tons.
CJ CheilJedang has been bolstering its market dominance, so much so that it has shown more than a double-digit growth rate compared to the previous year in both annual sales of nucleic acid and the first quarter sales of nucleic acid. However, it plans to further widen the gap by spurring greater growth, to an extent that will make it impossible for its competition to outperform it. Since manufacturing nucleic acid for the first time in 1977, CJ CheilJedang has been making forays into international markets, and the company currently has a total of three global nucleic acid production bases, in Liaocheng and Shenyang in China and Jombang in Indonesia.
Many say that CJ CheilJedang’s position in the global nucleic acid market is mostly attributable to its securing of both quality and cost competitiveness based on the advanced research and development (R&D) capabilities it has obtained through continuous and preemptive investment. A case in point is that in the Chinese nucleic acid market, the company not only boasts differentiated product competitiveness but also provides tailored solutions that take into consideration the characteristics of the market where business to business (B2B) transactions are predominant. Unlike other companies operating in China that focus on product marketing whose aim is to sell nucleic acid products only, CJ CheilJedang has adopted technology marketing whereby it provides not only nucleic acid products sought by local consumers but also their usage and recipes, and this has been a critical factor for its success in the Chinese market.
Microbial-based nucleic acid, in particular, is a product that requires extra high levels of fermentation and other related technologies due to the nature of its production process, so it is widely believed that CJ CheilJedang’s competent capabilities, including its unrivaled 40-year R&D know-how, multiple patented technologies, and production capability, laid the foundation for the company's current position in the nucleic acid field. CJ CheilJedang also plans to strengthen its rights to protect and prevent leakage of its proprietary patented technologies.
“The key factor that has led us to become the unrivaled leader in the global nucleic acid market is our super-advanced, unparalleled technology, which allows us to go one step further than the quality level desired by our customers,” said a CJ CheilJedang official. “Going forward, while continuously pioneering new markets to expand nucleic acid's range of applications, CJ CheilJedang will focus on securing a higher level of production capacity that will enable us to respond more quickly to changes in our external environment."