In a similar fashion to the rising costs of coal, electricity, oil, and transportation, more than a dozen small ammonium bicarbonate enterprises in Shaanxi have started to show clear differences in their performance. In today’s challenging environment, some companies that have relied on the "iron rice bowl" system are now heavily in debt. Even those that have undergone privatization but failed to innovate in products or business strategies are still struggling. Only those that have implemented both institutional reforms and product innovation have managed to thrive in this competitive landscape.
For long-term growth, a company must pursue two key innovations: institutional reform and product development. Institutional innovation helps streamline operations, improve management, boost efficiency, cut waste, and maximize resource utilization. Product innovation, on the other hand, allows companies to reshape their product and business portfolios, reduce risks associated with single-product dependency, and increase profitability. These changes can drive sustainable and even leapfrog development.
Many ammonium bicarbonate companies are currently facing survival challenges, with some believing that "closure is the only solution." The main reason for their struggles is their reliance on a single product, which does not align with the direction set by the "Eleventh Five-Year Plan" for the fertilizer industry. Therefore, adjusting the product structure and pursuing product innovation has become essential for survival.
This trend isn’t limited to Shaanxi. For example, Hebei Kaiyue Group, originally a small nitrogen fertilizer company producing 320,000 tons of ammonium bicarbonate annually, recognized the market risks of its single-product model and the inefficiencies of state-owned enterprises. It made a bold decision to reform and establish a joint venture focused on alcohol production. Today, the company produces 400,000 tons of methanol and 100,000 tons of dimethyl ether annually, becoming one of China's largest alcohol ether producers. It is now building two new 500,000-ton dimethyl ether plants, aiming to become a world-class production base. Once operational, the company's annual output value is expected to exceed 5 billion yuan.
It is hoped that the hundreds of struggling small chemical fertilizer companies across the country will find hope for survival and take the necessary steps toward innovation as soon as possible.
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