As a mage, I just want to pursue the truth

Chapter 131: Occupation of upstream industries in sub-sectors

The seed market is a very small segment, with annual global revenue of only about 10 billion US dollars.

Moreover, this field is relatively mature, and the compound growth rate of market size over the years is only 0.2%.

Compared with the semiconductor and new energy industries, the development is very slow.

Of course, the sudden rise of China Seed Group in 2022 has led to an increase of about percent in the size of the entire seed market.

A large amount of sea rice is grown on a large scale in China, the Middle East, Southeast Asia and other places, which belongs to the new market size.

Previously, sea rice only remained in the laboratory and had not been promoted on a large scale.

In this field, the gap between China and America is not large. In 2019, America and China ranked first and second in the seed market, with corresponding market shares of 26.7% and 21.2% respectively.

However, the gross profit margins vary greatly. The gross profit margins of Chinese companies mostly fluctuate around 20%, and some listed companies even have a gross profit margin of only 10%.

The gross profit margin of European and American seed giants, such as Monsanto, is 60%.

It is precisely because of the huge profit gap that European and American multinational giants have more funds to invest in research and development, and then their industrial advantages are also greater.

Take the Chinese Seed Company with a gross profit margin of 17% as an example. Their net assets are around 2021 billion yuan, and their net profit is negative 850 million. The government gave them a total of approximately million yuan in subsidies in .

How much can a company like this invest in R&D? The annual R&D expenses are only 2700 million yuan, and the management expenses are 7100 million yuan.

The same is true in many sub-sectors. Europe and the United States occupy the upstream of the industrial chain, have formed industrial advantages, and have mastered the pricing power of international trade.

If China wants to climb to the upstream of the industrial chain, it will take time, capital investment and R&D investment.

Most countries are unable to cross the middle-income trap precisely because they lack the ability and determination to climb to the upstream of the industrial chain.

Europe and the United States, by occupying the upstream of the industrial chain in many subdivided fields and enjoying high profit margins, are able to support a relatively wealthy and less extravagant life.

(Sorry, I couldn't help but say too much. Since the country's No. 1 document this year mentions the development of agriculture, and in line with the attitude that investors need to be responsible for their own money, I have gone through the financial reports of listed companies related to the seed industry in the past few days.

The investment in R&D is very low. Some listed seed companies with a market value of 30 billion only invest 200 million in R&D per year. A better company with a market value of 4000 billion spends million on R&D.

From what I have seen, the highest R&D investment is only around 1.1 million RMB.

Monsanto's R&D investment ten years ago was about 15 billion US dollars.

Very pessimistic)

Syngenta's market share has been greatly encroached upon.

China Seed Group not only encroached on the market share of these European and American seed companies, but also opened up many new markets.

Most importantly, they seem to have developed a new way to breed genetically modified seeds.

Therefore, they are eager to get a piece of the pie.

After internal discussions, Chen Jingrui decided to hand over part of the seed cultivation work to Syngenta, which would sell the seeds in Europe. This is feasible.

After all, China Seed Group holds a controlling stake in Syngenta.

However, Syngenta wants to participate in the research and development work of China Seed Group, but they have no say in this matter.

Because of the research institute, China Seed Group has no way of interfering.

Syngenta was having a difficult time, and Monsanto was in even worse shape. No solution was found for a long time, and Grant's position as president was shaky.

Monsanto shareholders were increasingly dissatisfied with him. Grant was under tremendous pressure, so he could only pass it on to his subordinates: "Forelli, it's been almost a year since China's super soybeans were invented. Why haven't we found the secret behind their rapid development?"

"Not only that, the Chinese have also launched a series of seeds for rice, wheat, corn, cotton, etc. that are better than any other products on the market."

"Our market share this year has dropped by at least 50 percent compared to last year!"

The specific data has not yet been released.

Furelli used to argue every time and find all kinds of excuses to delay time.

Because Grant wanted to lay off some researchers and reduce the scale of research, but Forelli was unwilling to do so. He wanted to fight for the interests of his subordinates.

Monsanto's annual R&D investment is 10% of its operating income. The decline in operating income this year means that R&D investment must also drop significantly. In this case, the only option is layoffs.

But this time, Furelli did not refute, nor did he vow to give himself some more time to find the reason. Instead, he was dejected:
"Grant, do you know about the recent paper published in Science about the existence of the soul?"

Grant nodded and said, "I saw it. Isn't it a detailed version of the paper Merlin published on magic.com? Even the name is a variation of Merlin. What's so strange about it?"

"We should all know this. There is even a team in the laboratory that specializes in soul research."

Yes, Monsanto wants to try to develop magical plants, so it has set up a special soul research team.

Trying to grow plants using souls as material.

But they have indeed made some progress in this regard. A large number of souls fill the air, and the plants cultivated there will show very faint characteristics, so faint that you cannot tell whether they are changes brought about by the souls.

We are still a long way from cultivating real magical materials.

Moreover, since intelligent organisms are used as materials, the price of intelligent life has been rising steadily in the past two years.

When Zheng Li was still in Singapore, the price of a lab monkey was 30 RMB. Now the price has risen to million RMB.

As a result, monkeys in Mount Emei are frequently poached.

Monkeys have become a resource whose value has risen even more wildly than lithium mines.

This was something Zheng Li had not expected. If he wanted to do experiments, buying experimental monkeys would cost a huge amount of money.

The price of experimental monkeys has been rising steadily, resulting in a significant increase in the R&D costs of domestic biopharmaceutical companies.

Coupled with the special medicine developed by American, Ge Lan's fund has been falling all the way. It can be said that there is a bottom below the bottom, and it is bottomless.

A group of newbies who were chasing after star fund managers suffered heavy losses.

Furelli nodded and said, "Yes, according to the information I got from a friend, the Chinese side is combining magic and breeding."

“So this year they have an endless supply of high-quality GM seeds.”

"This is a completely different system from our GM breeding network, and we have no way to learn from it."

"You should have a deep understanding of the difficulty of obtaining the magic brain. This is not something that Meng Shan can research."

Regarding Magic Brain and Magic Coin, many large companies want to get involved, but if they are really determined to invest huge amounts of money, the returns they will get are completely unknown.

No one could give a rough idea of ​​what the magic brain was, so many large companies chose to give up.

(End of this chapter)