1. Introduction to the Project

1.1 Project background

1.1.1 Product introduction

Under-story ginseng refers to ginseng that grows naturally in the wild state of the forest, commonly known as the "seed sea". Under-story mountain ginseng is a treasure of Tonghua. Its growth habits and ecological environment are consistent with those of wild ginseng, and it has the quality and medicinal value of wild ginseng. The ginseng recorded in ancient books is all wild ginseng, which can be replaced by forest ginseng nowadays. The longer its lifespan, the stronger its medicinal effect, and the higher its value. Under-story ginseng has the effects of greatly tonifying Qi, nourishing spleen and lungs, generating fluids and quenching thirst, calming the mind and improving intelligence. It is mainly used to treat diseases such as qi deficiency and desire to escape, insufficient temperament, sinking of qi, wheezing and coughing, shortness of breath and fatigue, fluid damage and thirst, quenching thirst, insomnia and forgetfulness, palpitations and blood deficiency.

Jilin Ji'an Tianli Ecological Agriculture Co., Ltd. is a five-star enterprise in leisure agriculture and rural tourism in Jilin Province. In response to the decision and deployment of high-quality development of ginseng in Jilin Province, the company has integrated Dalu Specialty Products Co., Ltd. and Tianli's 10,000 acre forest ginseng base to build a forest ginseng full industry chain development project that integrates forest ginseng planting, ginseng processing, vacation health preservation, and wild ginseng culture exhibition.

1.1.2 Market prospects

(1) Current situation of ginseng industry market

Ginseng is not only one of the "Three Treasures of Northeast China", but also regarded as the "King of All Herbs". In recent years, with the improvement of people's living standards, the value of ginseng has been increasingly valued, and the market size has gradually grown. In 2023, the output and demand of ginseng in China reached 91,934 tons and 95,675 tons respectively, with year-on-year growth of 4.2% and 6.2%. In 2023, China's ginseng market has reached 35 billion RMB yuan, and maintained a high compound annual growth rate. In the future, with the improvement of national living standards and the enhancement of health awareness, the demand for traditional tonics such as ginseng will continue to increase.

Ginseng is a unique and advantageous resource in Jilin Province, and the ginseng industry has the most advantageous characteristics in Jilin Province. As the largest ginseng production base and trading hub in China, Jilin Province's ginseng production accounts for about 60% of the national total and 40% of the world's total. The raw ginseng traded through the Changbai Mountain ginseng market accounts for about 85% of the national trading volume every year, and plays a pivotal role in the ginseng industry in China and even the world. In recent years, Jilin Province has improved the level of deep processing, enriched product categories, promoted industrial optimization and upgrading, and strived to tap into the huge consumer market while ensuring the quality of ginseng.

In 2023, the planting area of ginseng in Jilin Province will be 145,000 mu, with a fresh ginseng yield of 34000 tons. The area of under-story ginseng is 1.165 million mu, and the fresh ginseng yield is 781.8 tons. The comprehensive output value of ginseng industry in Jilin Province in 2023 is 70.85 billion RMB yuan, a year-on-year increase of 10.3%. Among them, the primary industry was 12.63 billion RMB yuan, the secondary industry was 24.48 billion RMB yuan, and the tertiary industry was 33.74 billion RMB yuan, accounting for 17.8%, 34.6%, and 47.6% respectively.

Chart 1: Production and Growth Rate of Fresh Ginseng in Jilin Province from 2016 to 2023

(2) Requirement analysis

The traditional functions of ginseng, such as strengthening, prolonging life, and enhancing intelligence, have been proven by modern medicine, deepening people's understanding of the credibility of traditional Chinese medicine and the correctness of classical discourse.  The active ingredients in ginseng include saponins, non saponins, small molecule peptides and peptides, polysaccharides, etc. Among them, ginsenosides have been studied the most, with high levels of Rgl and Rbl, strong activity, and wide effects. Rgl and Rbl are the main active ingredients of ginseng for promoting intelligence. The former can improve the entire memory process, while the latter has a facilitating effect on memory acquisition and memory reproduction.  Ginsenosides are mainly used in the pharmaceutical industry, daily cosmetics, food and feed industry, and other fields. For example, in the food and feed industry, saponins have a longevity effect and can be used as food additives.

With the continuous diversification of downstream demand for ginseng, the market demand for ginseng will show an increasing trend. It is expected that the domestic demand for ginseng will continue to grow rapidly in the next few years, and the demand for fresh ginseng in China may reach 83739.3 tons by 2028.

Chart 2: Forecast of Fresh Ginseng Demand in China from 2024 to 2028

(3) Import and export volume of ginseng

According to Chinese customs data, since 2017, the total import volume of ginseng related goods in China has fluctuated and increased, and the import amount has increased year by year. In 2022, the import volume of ginseng related commodities in China reached 3693.1 tons, a year-on-year increase of 3619.67 tons, or 49 times. The import amount reached 105.5039 million US dollars, a year-on-year increase of 73.49 million US dollars, a two-fold increase. The growth in import volume and import amount is driven by the consumption of fresh or dried American ginseng. In 2023, China's ginseng import volume has increased to 5753.17 tons, with a net import volume of 3582.63 tons. The import amount increased synchronously with the trade volume to 125,034,200 US dollars.

Table 3 Import amount and growth rate of ginseng related commodities in China from 2015 to 2023

According to Chinese customs data, from 2017 to 2022, the total export volume and total export amount of ginseng related commodities in China showed an overall downward trend. In 2022, the total export volume of ginseng related commodities in China reached 1803.39 tons, with a year-on-year increase of 286.36 tons, or 18.87%.  The total export value reached 79.9007 million US dollars, an increase of 12.1672 million US dollars year-on-year, with a growth rate of 17.96%.  In 2023, the export volume of Chinese ginseng will increase to 2170.54 tons, and the export amount will increase to 90.8716 million dollars with the trade volume.

Table 4 Export amount and change trend of Chinese ginseng related commodities from 2015 to 2023

(4) Market analysis of the project

Ginseng has always been known as the "king of all herbs" and is a precious traditional Chinese medicine. It can be divided into wild ginseng, forest ginseng, migratory ginseng, and garden ginseng based on its growth environment.  Under-story ginseng refers to ginseng that grows naturally in deep mountain forests after artificial sowing.  According to records, the cultivation of ginseng under forests in Jilin Province has a history of over 450 years. According to the definition of the National Pharmacopoeia and relevant standards, ginseng that naturally grows in deep mountain forests for more than 15 years after sowing is called "wild ginseng", which is the ginseng closest to the efficacy of wild ginseng.  Ginseng is rich in various active substances such as saponins, polysaccharides, amino acids, and trace elements. The earliest existing Chinese medicinal work, "Shennong Bencao Jing," has detailed records of the efficacy of ginseng.

The Jilin Provincial Party Committee and Government have cultivated the ginseng industry as a strategic emerging industry in the province, actively advocating that various business entities make full use of suitable ginseng forest land and adopt a simulated wild cultivation mode to plant under-story ginseng. At present, the total area of under-story ginseng planting in Jilin Province has reached 1.165 million mu, with an annual output of 781.8 tons and an output value of nearly 10 billion RMB yuan. Around the goal of building a ginseng industry worth billions of RMB yuan, the province has developed five major series and over 1000 products, cultivating a nationally renowned regional brand of "Changbai Mountain Ginseng". Jilin Province is focusing on the management of suitable ginseng forests Under-story, cultivation of excellent seeds, research and development of ginseng products, quality brand building, and promotion of ginseng culture, etc., to build the Changbai Mountain ginseng industry into an advantageous industry for strengthening forests and enriching the people, truly achieving ecological beauty, industrial prosperity, and people's wealth, and shining the golden signboard of the king of hundreds of grasses that has been passed down for thousands of years.

Tonghua, the "Chinese Ginseng City", the birthplace of ginseng culture, has 1700 years of documented ginseng mining activities and 400 years of artificial cultivation history. It is the core production area of Changbai Mountain ginseng and is building a core highland of China's ginseng industry. Ginseng has become the golden business card of Tonghua's local specialty. Ji'an City, Huinan County, Liuhe County, and Tonghua County under the jurisdiction of Tonghua have all been designated as ginseng production protection areas. Among them, Ji'an has been recognized as an advantageous area for Chinese characteristic agricultural products (ginseng), and Liuhe has been named the "hometown of wild ginseng in China", with unique natural advantages for the development of the ginseng industry.

Traditional ginseng cultivation mainly relies on logging and planting ginseng, which can cause damage to the ecological environment and is difficult to sustain.  In order to embark on a sustainable development path, since 2006, Tonghua has taken the lead in promoting and demonstrating the non forest land ginseng planting model nationwide. It has cultivated four new varieties of non forest land ginseng, gradually ending the history of logging and planting ginseng. While effectively protecting the ecological environment, it has opened up a new path for the green development of the ginseng industry. Nowadays, the cultivation and application of Tonghua ginseng varieties account for over 65% of the ginseng planting area in the province.

The ginseng industry is the most promising characteristic and advantageous industry in Tonghua City. Tonghua City actively integrates into the development strategy of the ginseng industry in the province, helping Jilin Province to build a hundred billion level ginseng industry, and making big achievements with small ginseng. Relying on its resource endowment and industrial foundation, Tonghua City has formed a ginseng industry development cluster that integrates planting, processing, scientific research, circulation, supervision, branding, and cultural tourism.

Tonghua City will deeply explore and organize the historical and cultural resources of ginseng, promote the traditional folk culture of ginseng, encourage people to participate in the integrated development of tourism and other industries, and further enhance the reputation, popularity, and influence of Tonghua ginseng. By vigorously promoting the integration and development of ginseng with cultural tourism and health care industries, Tonghua will become a health and wellness destination for "seeking the green fairy trail, searching for treasures, and enjoying the ginseng feast".  By 2025, the output value of the ginseng industry aims to reach 44 billion RMB yuan.  By 2030, the output value of the ginseng industry will reach billions.

Ji'an is the main origin of wild ginseng in eastern Liaoning in history, known as the "hometown of national ginseng" and "hometown of Chinese ginseng".  In recent years, the Ji'an Municipal Party Committee and Government have adhered to playing the "ginseng card" well and focusing on the "industrial economy", achieving dual wheel drive and joint efforts of the government and the market, laying a solid foundation for the high-quality development of the ginseng industry.  Ji'an Dalu Specialty Products Co., Ltd. is located in Group 5, Dalu Village, Dalu Town, Ji'an City, Tonghua City, Jilin Province. Its business scope includes drying, selling, and planting ginseng, Schisandra chinensis, and Chinese medicinal herbs.  The 10000 acre under-story ginseng base of Ji'an Tianli Ecological Agriculture Co., Ltd. was developed in 2000 and is now the largest in the province in terms of scale. It is a national pollution-free standardized ginseng planting base and a large-scale under-story ginseng planting base in China. Ji'an Tianli Ecological Agriculture Co., Ltd. plans to integrate Dalu Specialty Products Co., Ltd. and Tianli Wanmu Under-story Mountain Ginseng Base to layout the entire ginseng industry chain, with broad market prospects for the project.

1.1.3 Advantageous conditions of project construction

(1) Policy advantages

In September 2022, six ministries including the National Forestry and Grassland Administration, the Ministry of Agriculture and Rural Affairs, and the National Health Commission jointly issued the "Opinions on Supporting the High Quality Development of Jilin Ginseng Industry", proposing to promote the inheritance and development of traditional Chinese medicine characteristic health resources represented by Jilin ginseng, and to support the high-quality development of the ginseng industry throughout the entire chain.

In December 2021, Jilin Province released the "14th Five Year Plan for the Development of the Ginseng Industry in Baishan, the Governor of Jilin Province", which proposed to focus on promoting the extension of the deep processing chain of ginseng for medicinal, edible, and cosmetic purposes, accelerate the research and development of new products based on ginseng for pharmaceuticals, food, health products, biological products, cosmetics, and daily chemical products, and break through key technological bottlenecks. Guide the ginseng market to fully leverage its advantages in location, logistics, and product resources, and engage in comprehensive cooperation with tourism, cultural, and exhibition enterprises to create an integrated brand market for business travel, culture, and exhibitions.

In June 2022, Jilin Province issued the "Implementation Opinions on Accelerating the High Quality Development of the Ginseng Industry in the Province", proposing that by 2025, the total output value of the ginseng industry should reach 80 billion RMB yuan, and key shortcomings in ginseng planting, processing, warehousing and logistics should be basically filled, with a high-quality rate of fresh ginseng of over 85%. By 2030, the total output value of the ginseng industry aims to exceed 100 billion RMB yuan and become an emerging pillar industry in agriculture throughout the province.

In March 2023, the National Development and Reform Commission agreed to establish a demonstration zone for industrial transfer in southwestern Jilin, focusing on enhancing industrial transfer capacity, optimizing business environment, deepening open cooperation, effectively undertaking domestic and foreign industrial transfer, promoting industrial transformation and upgrading in the process of undertaking, and striving to build the demonstration zone into a characteristic manufacturing base in Northeast China, a green and low-carbon transformation pilot zone, a new highland for regional cooperation and development, and an important agricultural and special product processing base in the country. The demonstration zone covers three cities: Siping, Liaoyuan, and Tonghua.

In August 2024, Tonghua City, Jilin Province issued and implemented the "Tonghua City Ginseng Industry High Quality Development Regulations", which clearly put forward specific requirements for ginseng quality improvement, authentic protection, brand cultivation and protection, inheritance and development, supervision and management, and other aspects. Through a series of institutional arrangements, we aim to overcome the bottleneck issues that hinder the high-quality development of the ginseng industry, and provide strong regulatory support and legal guarantees for building a ginseng industry with a scale of billions.

(2) Resource advantage

Tonghua, located at the southwest foot of Changbai Mountain, is rich in medicinal resources. It enjoys the reputation of "three natural medicine banks", "hometown of ginseng in China" and the main producing area of genuine medicinal materials in Changbai Mountain. Tonghua City is one of the ginseng production bases for traditional Chinese medicine in China, and the ginseng grown in Tonghua City accounts for more than one-third of the total national output.  Ji'an City has been recognized as an advantageous area for Chinese characteristic agricultural products (ginseng), and Liuhe County has been named the "Hometown of Wild Ginseng in China". A total of 90 "Changbai Mountain Ginseng" brand raw material bases have been established, ranking first in the province in terms of quantity. At present, the remaining area of ginseng in non forest land in Tonghua is 55,000 mu, and the standardized planting rate of ginseng has reached 70%. According to relevant departments' calculations, Tonghua wild ginseng resources are very abundant, ranking first in the country in terms of area. The annual output of fresh ginseng in the city is about 13000 tons, accounting for nearly 40% of Jilin Province, providing a basic guarantee for industrial development.

(3) Industrial advantages

As the authentic core production area of Changbai Mountain ginseng, Tonghua City has listed the ginseng industry as one of the three key advantageous industries worth billions of RMB yuan to be developed. Tonghua City is promoting the standardization of planting while also advancing the scale of processing. There are currently 26 large-scale ginseng processing enterprises, 5 national level industrialization leading enterprises, 14 provincial-level industrialization leading enterprises, and 11 provincial-level "science and technology little giant" enterprises in the city. The products cover more than 800 varieties in five major series: food, health products, drugs, cosmetics, and biological products. Tonghua County has been recognized by the state as a "typical county of the entire ginseng industry chain", and Ji'an and Tonghua County ginseng modern agricultural industrial parks have been recognized as national and provincial industrial parks, respectively. In 2022, the ginseng industry in Tonghua achieved an output value of 31.74 billion RMB yuan, a year-on-year increase of 5.8%, accounting for half of Jilin Province.

(4) Location advantage

Ji'an City is located in the southeast of Jilin Province and the south of Tonghua City, at the southwest foot of Changbai Mountain, adjacent to 5 districts and counties, with a total area of 3341 square kilometers. The urban area of Ji'an City is 103 kilometers away from the highway of Tonghua City, 422 kilometers away from the highway of the provincial capital Changchun City, and 260 kilometers away from the highway of Dadonggang in Liaoning Province.

Ji'an City is located in the core area of the Yalu River International Economic Cooperation Belt, facing Manpu City, Cicheng County, Chushan County, and Weiyuan County of the Democratic People's Republic of Korea across the river, with a border line of 203.5 kilometers. Ji'an Port is one of the three major ports for China's trade with North Korea and the only port city in Tonghua City. The China North Korea international train travels between the two countries daily and is an important gateway for Jilin Province to open up to the south.

There are two dedicated railways in Ji'an City, international and domestic. The Ji'an Railway runs through the north and south, providing direct access to Beijing, Changchun, Qingdao, Dalian and other places. The cross-border railway connects with Manpu City in North Korea and reaches the hinterland of the Korean Peninsula.  The domestic railway is mainly the Tongji section of the Meiji Line, with a length of 46 kilometers. It is a major transportation artery that crosses the southeast of Tonghua City, Tonghua County, and Ji'an City, and is also an important railway transportation line in Northeast China.  The international route from Ji'an to Manpu in North Korea, with a length of 8 kilometers, is one of the important routes for China to exit North Korea.

(5) Talent advantage

There are currently 19 ginseng research institutions in Jilin Province.  Tonghua City has seven ginseng research institutions, including Academician Zhang Boli Workstation, Jilin Ginseng Research Institute, and Ji'an Ginseng Research Institute, and has achieved more than 40 provincial-level or above scientific research results.  Seven new ginseng varieties, including "Xinkaihe No.1", "Kangmei No.1", and "Yisheng Han Ginseng No.1", have been approved.  The National Technical Standard Innovation Base (Ginseng Industry) has settled in Tonghua.  Yisheng Pharmaceutical independently developed and produced Xinyue Capsules using ginseng as raw material, which is a national second-class new drug, and ginseng hypoglycemic capsules are a national protected variety of traditional Chinese medicine. Ginseng monomer Re is included in the National Spark Program. In addition, Tonghua Normal University established the Ginseng College in 2019, which has played a great role in cultivating ginseng professionals and strengthening the foundation of the ginseng industry.

The Tonghua Municipal Government has signed science and technology strategic cooperation agreements with provincial universities and research institutions such as Northeast Normal University, Jilin Agricultural University, Changchun Institute of Applied Chemistry, Chinese Academy of Sciences, and Tonghua Normal University, providing technological support for enterprise development. Tonghua City continues to provide assistance to enterprises in talent cultivation and other aspects, vigorously implementing the "Ten Thousand Students Revitalizing Enterprises Plan" and "Thousand Students Returning Home Plan", and continuously attracting college graduates for enterprises.

1.2 Project Construction Content and Scale

The project integrates Dalu Specialty Products Co., Ltd. and Tianli Wanmu Under-story Mountain Ginseng Base to layout the entire ginseng primary, secondary, and tertiary industry chain.

Primary production: Expand and integrate 50,000 acres of standardized planting base for mountain under-story ginseng.

Secondary industry: It covers an area of 100 acres and a building area of 60,000 square meters, mainly constructing buildings and supporting facilities such as factories, warehouses, office buildings, equipment rooms, etc., purchases ginseng deep processing production lines, and produce ginseng food, health products, cosmetics and other products.

Third industry: Construction of Xianshen Valley Health Resort, Wild Ginseng Cultural Center, etc. The Xianshen Valley Health Resort covers an area of 50 acres with a building area of 50000 square meters. It is built as a "tourism integrated" sightseeing resort that combines the experience of forest mountain ginseng harvesting and excavation with forest leisure and health care. The resort has a forest mountain ginseng harvesting and excavation experience area, a forest health walking area, a tourist leisure area, a specialty food and rural home-stay enjoyment area, etc., which can meet the diverse needs of weekend tours, self driving tours, etc. The wild ginseng cultural center covers an area of 2000 square meters and has a building area of 3,000 square meters.

1.3 Total investment of the project and capital raising

1.3.1 Total investment of the project

The total investment of the project is 1.5 billion yuan, including construction investment of 1.3 billion yuan and working capital of 200 million yuan.

1.3.2 Capital raising

Self-raising of the enterprise.

1.4 Financial analysis and social evaluation

1.4.1 Main financial indexes

After the completion of the project, it is expected that the annual sales revenue will be 1.6 billion yuan, the annual profit will be 500 million yuan, the investment payback period will be 6 years (after tax, including a construction period of 3 years), and the investment profit margin will be 33.3%.

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

1.4.2 Social evaluation

The project adopts a full industry chain layout, integrating various industries such as health preservation, tourism, and culture, which helps to promote the optimization and upgrading of the industrial structure. It can also drive the development of local service, catering, accommodation, and other related industries, create employment opportunities, and promote economic growth.

1.5 Cooperative Way

Sole proprietorship or joint venture.

1.6 What to be invested by the foreign party

Funds and others.

1.7 Construction site of the project

Ji'an City, Tonghua City, Jilin Province.

1.8 Progress of the project

A project proposal has been prepared.

2. Introduction to the Partner

2.1 Basic information

Name: Ji'an Tianli Ecological Agriculture Co., Ltd

Address: Dalu Town, Ji'an City, Tonghua City, Jilin Province

2.2 Overview of the Partner

Ji'an Tianli Ecological Agriculture Co., Ltd. was established in 2011 with a registered capital of 20 million RMB yuan. It is located in Gumaling Village, Dalu Town, Ji'an City. The company's business scope includes the cultivation, processing, production, and sales of crops, ginseng, and traditional Chinese medicinal materials.

The company began developing a 10,000 acre under-story ginseng base in 2000, and now has the largest scale in the province. It is a national ginseng harmless and standardized planting base and a large-scale under-story ginseng planting base in China. The forest area is nearly 20000 acres, and it is expected to expand to 30000 to 100000 acres in the long term. At present, the company has planted over 16000 acres. More than 70,000 kilograms (35 tons) of ginseng seeds were sown in total. There are over 200 million wild ginseng plants Under-story that have been in use for 8-18 years in the jurisdiction, among which the number and value of ginseng that has been in use for more than ten years ranks first in the country.

2.3 Contact Information

2.3.1 Contact information of cooperating units

Contact unit: Ji'an Tianli Ecological Agriculture Co., Ltd

Contact person: Hou Jun

Tel: +86-18643578888

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

Contact unit: Tonghua Municipal Bureau of Commerce

Contact person: Wang Liangchen

Tel: +86-435-3199017  +86-18643036783

E-mail: thsswjtck@126.com