1. Introduction to the Project

1.1 Project background

1.1.1 Product introduction

Hunchun Port was approved by the state as one of the first designated ports for imported grain in China in 2014. The construction site of the project is located in the Hunchun Marine Economic Demonstration Zone, relying on unique location advantages to provide effective support for the construction of the project. The construction of the project can actively develop international grain trade, improve the agglomeration of imported grain and food industries, and form a true agricultural product processing industry cluster, which meets the needs of entrepreneurship and development of settled enterprises.

1.1.2 Market prospect

(1) The necessity of importing Russian grain into China

As a major agricultural country, China has 1.913 billion acres of arable land, ranking fourth in the world. And China’s population is 1.4 billion, ranking among the top two in the world. According to rough statistics, the domestic grain production will exceed 160 million jin in 2024, which can meet the daily needs of the domestic people. But in reality, China needs to import a large amount of grain every year. For example, in 2023, China signed agricultural orders worth 250 million rubles, equivalent to 170 billion yuan, with Russia, ordering over 70 million tons of grain. In addition, China also has close grain trade relations with the United States and Australia.

The reason why China still maintains a large amount of grain imports while meeting domestic demand in terms of grain production can be attributed to two aspects: internal and external factors. In terms of internal factors, the use of grain is not only for residential consumption, but also includes feed for animal husbandry, raw materials for brewing, and so on. Therefore, although China’s grain production can meet the daily consumption of residents, the production of animal husbandry feed also requires grain imports. Due to the disadvantage of natural terrain, China lacks vast pastures and grasslands, so animal husbandry has a serious dependence on feed. The second reason why our country is vigorously importing agricultural products is to stabilize the value of crops through market regulation. Thus reducing the impact of crop price fluctuations on consumers’ daily lives. By importing grain, we aim to stabilize the average price of grain in China at a cost-effective level. Avoid drastic fluctuations in crop prices during natural disasters such as natural disasters, droughts, and floods.

The external factor of China's large-scale import of agricultural products is to actively promote the optimal allocation of resources. High quality crops from our country, with even higher quality, can be exported to developed countries for economic benefits.

At the “Belt and Road” International Cooperation Summit in 2023, Chinese leaders and Russian leaders held cooperation talks. We will increase cooperation in the future and actively promote economic globalization together. Both parties have also agreed to transport over 70 million tons of crops such as beans, oilseeds, and grains to China within the next 12 years.

This grain supply contract is the largest grain supply contract in the history of China and Russia. With the end of the first quarter of 2024, Russia has prioritized supplying over $125 million in grain to the Chinese market.

Among the types of grains, the ones with the most significant increase are wheat and barley. The growth rate of wheat exceeded 10 times, and the year-on-year growth rate of barley was also 7 times that of last year.

There are three main considerations for choosing to increase imports of orders from Russia. One of them is that Russian agricultural products have lower prices and a price advantage.

Russia is vast and sparsely populated, with a large amount of arable land and abundant crop yields. But Russia has a sparse population, so a large amount of crops are exported. Due to the fluctuation of the international situation, a large number of agricultural products in Russia have become unsold. In order to alleviate the embarrassing situation of unsold agricultural products, Russia has lowered the prices of domestic agricultural products for sale. Under the price advantage, China has naturally increased its imports of agricultural products from Russia.

(2) Analysis of the prospects of China’s imported grain and food products

Compared to Australia and the United States, Russia is geographically closer to our country. Therefore, importing crops through Russia can help our country save transportation costs and be more affordable.

Moreover, China and Russia have frequent trade exchanges and are all important countries in the “Belt and Road” trade circle. Therefore, increasing trade exchanges between China and Russia can promote the further development of the “Belt and Road” trade line.

Due to the increasing scarcity of agricultural cooperation partners, Russia will lower this year’s crop production to avoid economic losses caused by the backlog of agricultural products. But the Russian side has confirmed that it will prioritize supplying China’s food needs.

At the China-Russia Summit 2023, the Russian side stated that enhancing the diversity of food cooperation and increasing supply between the two countries will be included in the joint declaration, demonstrating Russia’s determination to strengthen food cooperation with China. And Russia also plans to use sea transportation to explore new trade channels between China and Russia. Russian grain is constantly being transported to our country, and in the future, the grain trade between China and Russia will continue to grow.

Hunchun is located on the northeastern border of China, bordering Russia. Its unique location advantages provide broad prospects for importing Russian food and grain. As an important window connecting China with various countries in Northeast Asia and a key node of the Eurasian Continental Bridge, Hunchun is not only close to the important grain production base in the Russian Far East, but also has multiple well-equipped and highly efficient ports open to the outside world, providing convenient channels for the rapid transportation and initial processing of grain. At the same time, Hunchun, as a frontier city for China's cooperation with Russia, enjoys multiple preferential policies granted by the state, which helps to reduce import costs and attract more grain and food traders and investors. With the implementation of China’s Northeast Revitalization Strategy and the continuous deepening of regional economic cooperation in Northeast Asia, Hunchun will further highlight its location advantages. Importing Russian grain and food not only enriches the domestic market and meets consumers’ demand for high-quality food, but also promotes economic and trade cooperation between China and Russia, and drives regional economic development.

1.1.3 Advantageous conditions of project construction

The Ministry of Industry and Information Technology and 10 other departments jointly issued the Guiding Opinions on Cultivating Traditional Advantageous Food Production Areas and Local Characteristic Food Industries, which clarifies the development goals of traditional advantageous food production areas and local characteristic food industries, proposes to have basically formed a local characteristic food development pattern of “billion dollar leading, billion dollar cluster, trillion dollar industry” by 2025, cultivated more than 5 traditional advantageous food production areas with the annual operating income exceeding 100 billion yuan and more than 25 leading backbone enterprises with the annual operating income exceeding 10 billion yuan, and created a number of nationally renowned local characteristic food brands and typical cases of industrialization of local characteristic snacks.

The Guiding Opinions on Accelerating the Construction of a Modern Grain Industry System with High-quality Development as the Goal, GLL [2019] No. 240 issued by the National Development and Reform Commission and the National Grain and Material Reserve Bureau pointed out that vigorously developing the grain industry economy and accelerating the construction of a modern grain industry system are of great significance for enhancing the ability to ensure food security, promoting agricultural quality and efficiency improvement, and better meeting the needs of the people for a better life. By 2025, a modern grain industry system with coordinated development of the real economy, technological innovation, modern finance, and human resources will have been basically established. The pattern of “big grain, big industry, big market, and big circulation” will have been fully formed, and the ability to prevent and resolve risks and challenges in the grain field and ensure national food security will have been significantly enhanced. The added value of the grain industry grows at an average annual rate of about 7%, with a total output value of 5 trillion yuan; more than 60 grain enterprises with a main business income exceeding 10 billion yuan; the supply of high-quality green products has significantly increased, fully meeting the demand for grain and oil consumption; new breakthroughs have been made in technological innovation, gradually forming world-class innovation leadership capabilities and industrial competitive advantages; International food cooperation and exchanges continue to deepen, and the level of coordinating “two markets and two resources” has significantly improved.

At the the Belt and Road Summit Cooperation Forum in October, 2023, China and Russia signed a food supply contract worth 2.5 trillion rubles. According to the contract, Russia will supply 70 million tons of various types of grain to China in the next 12 years, which is currently the largest grain trading contract signed between China and Russia.

1.2 Contents and scale of project construction

The total land area of the project is 58000 square meters, with a total construction area of 57233 square meters. Among them, the standardized factory building area is 40926 square meters, the warehouse building area is 2528 square meters, and the public supporting building area is 13779 square meters. It is to mainly build the standardized plant building, warehouse, service building, equipment rooms, 10kV substation, security guard, and related supporting public works.

1.3 Total investment of the project and capital raising

The total investment of the project is 300 million yuan, including the construction investment of 240 million yuan.

1.4 Financial analysis and social evaluation

1.4.1 Main financial indexes

After the project reaches the production capacity, its annual sales revenue will be 163.93 million yuan, its profit will be 49.2 million yuan, its investment payback period will be 6.1 years (after the tax, including the construction period of 1 year) and its return on investment will be 16.39%.

Note: “10 thousand yuan” in the table is in RMB.

1.4.2 Social evaluation

The establishment of the Imported Grain and Food Industrial Park in Hunchun City has played a positive role in the local economic development, attracting domestic and foreign grain processing enterprises to settle in, increasing employment opportunities, improving the income level of local residents, and introducing advanced equipment and technology to enhance the technical level and product quality of the grain processing industry, ensuring food safety, and boosting consumer confidence. At the same time, the construction of industrial parks helps optimize the regional industrial structure, promote the extension of the agricultural industry chain, and advance the process of agricultural modernization. In addition, the industrial park also pays attention to environmental protection and sustainable development, adopts energy-saving and emission reduction measures, reduces pollutant emissions, and strives to achieve green production. These efforts not only improve the living standards of local residents, but also promote social stability. In summary, the Hunchun Imported Grain and Food Industrial Park plays an important role in promoting local economic development, improving industrial technology, optimizing industrial structure, protecting the environment, and enhancing residents’ quality of life.

1.5 Cooperative way

Sole proprietorship, joint venture or cooperation

1.6 What to be invested by the foreign party

Funds, and other methods can be discussed in person.

1.7 Construction site of the project

Hunchun Marine Economy Demonstration Zone

1.8 Progress of the project

The project proposal has been prepared.

2. Introduction to the Partner

2.1 Basic information

Name: Yanbian Bureau of Commerce

Address: 3322 Tianchi Road, Yanji City, Yanbian Korean Autonomous Prefecture, Jilin Province

2.2 Overview

Hunchun, a county-level city under the jurisdiction of Yanbian Korean Autonomous Prefecture in Jilin Province, is located in the eastern part of Jilin Province and southeast of Yanbian Prefecture. It has been granted the management authority of a prefecture level city government and is a pilot city for the reform of expanding power and strengthening counties in Jilin Province, as well as a land border port city. It is adjacent to Wangqing County with Laoye Ridge as the boundary, connected to Tumen City in the northwest corner, and adjacent to Dongning City in Heilongjiang Province in the northeast, with a total area of 5141 square kilometers. It has jurisdiction over 4 streets, 4 towns, and 5 townships. Hunchun has a good natural ecology and is home to national scenic spots such as Fangchuan Scenic Area, Tumen River National Forest Park, Northeast Tiger and Far Eastern Leopard Nature Reserve, Oriental First Whistle, Tuzi Stone Boundary Monument, and Folk Chaozu Village.

Hunchun has a long history. As early as the Neolithic Age more than 4000 years ago, the “Sushen” ethnic group had been thriving in the area, and it was one of the first four border open cities in the country. In April, 2012, the State Council approved the establishment of the China Tumen River Region (Hunchun) International Cooperation Demonstration Zone; in January, 2020, Jilin Provincial Party Committee and Government issued the Opinions on Supporting Hunchun to Carry out Marine Economic Cooperation and Development Demonstration; in May, 2020, the National Development and Reform Commission and the Ministry of Natural Resources jointly replied to support the construction of the Hunchun Marine Economic Development Demonstration Zone in Jilin. After the establishment of Hunchun Marine Economy Development Demonstration Zone, efforts will be made to build it into a regional marine industry agglomeration center, port and shipping logistics distribution center, port industrial manufacturing center, cross-border international trade center, and open cooperation center in the Tumen River area. At the same time, it promotes mutual support between the demonstration zone and the modern urban agglomeration of Changchun and the central urban agglomeration, and strengthens cooperation with Zhejiang Province, especially Ningbo City.

2.3 Contact method

2.3.1 Contact method of the project:

Contact person: Liu Yanjun

Tel: +86-13069088999

2.3.2 Contact method of the city (prefecture) where the project is located：

Contact unit: Yanbian Bureau of Commerce

Contact person: Li Jingyu

Tel: +86-13596515933