<div id="readability-page-1">With their domestic profits narrowing and production capacity expanding, China’s firms are continuing to widen their overseas footprints in search of new, more lucrative markets. In this series, we examine China Inc.’s next phase of “going global” and the complex, challenging international environment its companies have chosen to enter.\nChinese biotech companies are expected to make major international advances over the next decade, industry leaders said, but cautioned that weak patent portfolios and protectionist measures in foreign countries may hinder this progress.\nAs the sector's manufacturing base and supply chain strengthen and the global appetite for biotechnology continues to grow, building an overseas presence appears to be the next step for firms looking to make their mark.\n“A lot of our overseas clients have repeatedly told us they want our supply chain and manufacturing to be closer to their markets,” said Guo Henghua, president of Anhui Huaheng Biotechnology, adding that orders from overseas account for about half the company’s total sales.\n“I believe that in the next five to eight years – and certainly within 10 – Chinese companies will see major breakthroughs in expanding abroad and in building regionally integrated manufacturing and supply systems,” she said during a panel discussion at the sixth Bio-Manufacturing Industrial Conference in Shenzhen earlier this month.\nThe state-owned newspaper Economic Daily reported that He Yaqiong, director of the consumer goods department at the Ministry of Industry and Information Technology, told a biomanufacturing forum in September that China now accounted for more than 70 per cent of global fermentation capacity, a key midstream segment of the industry.\nBut venturing into new spaces means Chinese biotech companies may need to make changes they previously did not have to consider – including sourcing original work to avoid being hit with a patent lawsuit.\nWuXi Biologics, a leading Chinese pharmaceutical research and services provider, said on December 2 that it had signed a strategic cooperation memorandum with Qatar to lay the groundwork for its first integrated research, development and manufacturing facility in the Middle East.\n“The highly efficient engineering and production management practices we’ve developed over the past two decades ... form our own Great Wall of protection,” said Pi Zhongmin, vice-president of MeiHua Holdings, a leading monosodium glutamate (MSG) producer in China, during the same panel at this month’s conference.\n\n\n“But as we expand overseas and aim to replicate our success, our core advantage can’t remain solely an obsession with scale and cost efficiency,” he added.\nPi pointed to a recent case in which Japanese MSG maker Ajinomoto filed a 260 million yuan (US$36.8 million) patent-infringement lawsuit against Meihua. The dispute arose after the Chinese company acquired part of the business of the Japanese firm’s industry counterpart, Kyowa Hakko.\n“This made us realise, first-hand, that future competition will hinge on patents rather than the old belief that scale and lower costs can secure market share,” he said.\nBiomanufacturing was identified by Beijing as a “future industry” to be strategically developed in this year’s government work report, with the aim of securing an early-mover advantage.\nThe sector, which uses engineered strains and cells to produce a wide range of everyday products from cosmetics and pharmaceuticals to food ingredients and agricultural inputs, has grown rapidly in China in recent years.\nKang Le, an academician of the Chinese Academy of Sciences, emphasised the importance of original innovation and patent protection for Chinese biotech companies during a panel discussion at the Shenzhen conference, noting that a lack of self-reliance on technologies can pose significant risks as a company grows.\nHe cited the example of biological fungicides – an alternative to traditional chemical pesticides – noting that China was still in the early stages of development and currently lacked independent intellectual property for the genetically modified strains which are foundational in the sector.\n\n\n\n\n“If you use someone else’s strains, when your company is small, no one pays much attention. But once your company grows large, they may sue you – and if they do, you could end up paying substantial damages,” Kang said.\nChinese biomanufacturing companies are seeing a rapid rise in patent filings. According to data from Tsinghua University, 100 leading biomanufacturing firms have filed a total of 13,680 patents over the past five years, accounting for 52.2 per cent of all historical filings in China.\nGuo, of Anhui Huaheng Biotechnology, echoed concerns patent holders during the panel, adding that local trade protection regimes created “huge hurdles” for companies expanding overseas.\n“As we advance our global marketing efforts, we have inevitably encroached upon markets long dominated by established Fortune 500 companies,” she said.\n“As a result, we are bound to encounter – and are already experiencing – various technical trade measures such as anti-dumping actions aimed at slowing or restricting the global expansion of fast-growing companies like ours.”\nA subsidiary of Anhui Huaheng Biotechnology has been subject to EU anti-dumping tariffs since August, which ruled that valine – a material used in animal feed or pharmaceuticals to supplement essential amino acids – produced by the company would face a provisional anti-dumping duty of 53.9 per cent.\nIn July, the US also imposed preliminary anti-dumping duties of over 300 per cent on Chinese erythritol, a low-calorie sweetener used in food and drink products.\n</div>

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<p>Chinese biotech firms are planning global expansions due to narrowing domestic profits and increased production capacity. Despite challenges like weak patent portfolios and protectionist measures, industry leaders expect major international advances in the next decade. Companies like WuXi Biologics and Anhui Huaheng Biotechnology are focusing on building overseas presence and integrated manufacturing systems. However, they face hurdles such as patent lawsuits and trade protection regimes. The sector's growth is supported by China's significant fermentation capacity and increasing patent filings.</p>

‘Major breakthroughs’: Chinese biotech firms plan global expansions after domestic success