1. Introduction to the project

1.1 Project background

1.1.1 Product introduction

Ginseng is known as the “King of Herbs” and is one of the famous “Three Treasures of Northeast China” (ginseng, snow clams, deer antler). It is a precious medicinal herb that is well-known both domestically and internationally, and has three major health functions approved by the State Food and Drug Administration: “anti fatigue, anti radiation, and anti-aging”. Ginseng beverage is a beverage or health food made mainly from ginseng or ginseng extract.

The project utilizes the ginseng planting resources in Huadian City to develop and produce a series of ginseng health drinks to satisfy the diverse needs of consumers and achieve the upgrading of the ginseng industry.

1.1.2 Market prospect

1. Development status of ginseng industry

(1) The current development status of the global ginseng industry

Ginseng is known as the “King of Hundred Herbs” and “Oriental Divine Grass” due to its magical medicinal and health benefits. It is a dual-use herb with high medicinal value. In addition to being widely used in formula medicine, it has also entered various fields such as health products, cosmetics, food, beverages, gifts, ginseng cigarettes, ginseng wine, ginseng sugar, ginseng tea, etc. In recent years, global ginseng production has steadily increased. In 2021, the global ginseng production reached 84,677 tons, and in 2023, the global ginseng production reached 97,321 tons. Currently, ginseng is mainly produced in seven countries including R.O.K., D.P.R.K., Russia, the United States, Canada, Japan, and China. Among them, China accounts for more than 80% of the global production. Data shows that the global ginseng market size is expected to reach approximately 46.6 billion RMB yuan in 2023, and is expected to maintain a steady growth trend in the coming years. By 2029, the market size will approach 89.6 billion RMB yuan, with a compound annual growth rate of about 9.6%.

(2) Development Status of Ginseng Industry in China

In recent years, the production and sales of ginseng in China have maintained a growth trend. In 2021, the output of fresh ginseng in China reached 69,850 tons, of which Jilin will account for 56.78%, Heilongjiang will account for 28.63%, Liaoning will account for 7.37%, and the demand reached 70,031.9 tons. From the perspective of price trend, the average price of fresh ginseng in China has gradually declined since 2014. The average price of fresh ginseng in China was 121.4 RMB yuan/kg in 2021, and about 120.6 RMB yuan/kg in 2023.

From 2020 to 2023, the number of ginseng imports in China continued to grow due to the pandemic. The import quantity reached about 90 tons in 2023, a year-on-year increase of 21.8%. The import amount remained stable from 2022 to 2023, reaching approximately 32.29 million US dollars by 2023. From the source of imported products, in 2023, China’s ginseng imports mainly came from Canada, R.O.K. and the United States, of which Canada accounted for about 60%, R.O.K. accounted for about 26%, and the United States accounted for 15%. China is a large producer of ginseng. From the overall situation of China’s ginseng import, China mainly imports refined products with high import value, small quantity but high added value. With the increase in domestic consumer income, the quality requirements for ginseng products have risen, which will drive the industry’s imports. In general, China’s ginseng industry has a good import situation. The main competitive pressure comes from the rise of domestic ginseng brands and the improvement of ginseng processing technology.

Table 1 Quantity and Change of Chinese Ginseng Imports from 2017 to 2024 (Unit: ton,%)

From 2019 to 2021, affected by the pandemic, the number of ginseng exports in China continued to decline, reaching a low point in 2021 in recent years. Since 2022, exports have continued to rebound, reaching approximately 2070 tons by 2023, a year-on-year increase of 44%. The overall export value of ginseng shows a W-shaped trend. 2021 is a recent low point, with an export value of only 240000 US dollars. The export value continued to rise from 2022 to 2023, exceeding 1.6 million US dollars by 2023, a year-on-year increase of 46%, and returning to the level of 2017. From the perspective of export destinations, in 2023, the main export destination of ginseng in China will be Japan, accounting for more than 40%, followed by Hong Kong and Taiwan, China, accounting for 23.8% and 16.9% respectively, and other regions will account for less than 5%. In terms of average export price, the average export price of ginseng from 2017 to 2023 fluctuated within the range of 0.5-0.8 US dollars per kilogram. The average export price has slightly increased in 2022, reaching approximately 0.85 USD/kg in 2023, but overall it remains relatively stable. In general, the number of ginseng exports in China decreased first and then increased, with a warming trend in 2023. From the perspective of export targets, about 40% of China’s ginseng exports to Japan, and the average export price is relatively stable. In the long run, with the research and development of ginseng consumer products by domestic enterprises, the added value of ginseng products exported to foreign countries continues to increase, which is expected to increase the number and amount of ginseng exports in China.

Table 2 Quantity and Change of Chinese Ginseng Export in 2017-2024 (Unit: ton,%)

(3) Development Status of Ginseng Industry in Jilin Province

As the largest province of ginseng production in China, ginseng industry is the most advantageous and potential industry in Jilin Province. There are three main ways to plant ginseng in Jilin Province: forest cutting, under-story planting, and non forest planting. Ginseng in Jilin Province is mainly distributed in four regions: Yanbian, Tonghua, Baishan, and Jilin, namely Dunhua City, Hunchun City, Helong City, Antu County, Wangqing County, Fusong County, Jingyu County, Changbai County, Linjiang City, Tonghua County, Liuhe County, Meihekou City, Ji'an City, Jiaohe City, Huadian City, Panshi City, Huinan County, and more than ten major producing counties. To ensure the quality of ginseng, Jilin Province has successively formulated 15 national standards and nearly 50 local standards in the field of ginseng. At the same time, provide standard and green planting plans for farmers. Like planting grains, ginseng cultivation in Jilin Province has also comprehensively carried out soil testing and product testing and certification. The average yield of ginseng per square meter in the province has increased from 16 kilograms to 20 kilograms, with a high quality rate of over 75%.

In 2023, the ginseng industry in Jilin Province has achieved standardized production, refined processing, and branded sales, forming a cluster development trend of deep integration of primary, secondary, and tertiary industries. The production scale and product quality have steadily improved.  According to the Ginseng and Mushroom Office of the Provincial Department of Agriculture and Rural Affairs, in 2023, the planting area of ginseng in Jilin Province was 145,000 mu, with a fresh ginseng yield of 34000 tons. The planting area of ginseng under the forest was 1.165 million mu, with a fresh ginseng yield of 34,000 tons. The comprehensive output value of the ginseng industry in the province was 70.85 billion RMB yuan, a year-on-year increase of 10.3%, and exceeded 70 billion RMB yuan for the first time.

In recent years, Jilin Province has anchored the goal of building a strong agricultural province, turning the ginseng industry into a billion dollar scale industry, and constructing a new pattern of multi-point support, multi industry development, and diversified development. In places such as Fusong, Ji'an, Jingyu, Tonghua, and Yanji, an industrial belt dominated by ginseng has been formed, and many ginseng production enterprises and ginseng pharmaceutical enterprises have emerged. At present, Jilin Province has developed and produced more than 1,000 products in five major series including ginseng food, medicine, health products, cosmetics, and biological products, realizing the full plant development and utilization of ginseng.

2. Development status and prospects of ginseng health products industry

Modern research has proved that ginseng contains saponins, polysaccharides, proteins, amino acids and other components, which have the activities of regulating body immunity, anti myocardial ischemia, antioxidant, anti dementia and anti-aging.  With the increase of ginseng health product production enterprises, the output and production capacity of the entire industry continue to increase. Currently, companies involved in the ginseng health product industry in China are generally not large in scale. At present, there are more than 160 ginseng health products that have obtained approval numbers from the State Food and Drug Administration, involving various varieties such as ginseng beverages, ginseng cola, ginseng oral liquid, ginseng wine, ginseng tea, etc. Due to the fact that ginseng health products can be taken directly or used to make wine or soup, they are more popular among consumers.

Health food, as an effective means of preventing diseases and promoting health, has gradually gained widespread recognition. Coupled with the fact that the raw materials are traditional and precious tonics, the dual advantages drive the steady expansion of the industry scale. From 2019 to 2023, the market scale of ginseng health food industry in China will increase from 10.415 billion RMB yuan to 12.139 billion RMB yuan, with a compound annual growth rate of 3.90%. It is estimated that the market size of ginseng health food industry in China will increase from 12.57 billion RMB yuan to 15.104 billion RMB yuan in 2024-2028, with a compound annual growth rate of 4.70%.

1.1.3 Technical Analysis

The production technology of the project product adopts mature automation production technology in the market. The raw ginseng is soaked and cleaned, then subjected to high-pressure steaming, cutting, colloid grinding, and filtration. It is mixed with Tremella fuciformis that has been soaked, cleaned, steamed, ground, and filtered, as well as additives such as sugar and honey acid. After homogenization, instant sterilization, metering and filling, and secondary sterilization, the finished product of ginseng functional beverage is obtained.

1.1.4 Advantageous conditions of project construction

(1) Policy advantages

The Notice of the General Office of the People's Government of Jilin Province on Issuing the 14th Five Year Plan for the Development of Baishan Ginseng Industry by the Governor of Jilin Province proposes to rely on the construction of Changbai Mountain ginseng advantage characteristic industry clusters, fully leverage the leading and driving role of key leading enterprises, and vigorously develop ginseng food, pharmaceuticals, health products, cosmetics, biological products, and wild mountain participation products. We will focus on building a consortium of edible ginseng, medicinal ginseng, ginseng cosmetics, ginseng extracts, and specialty wild ginseng deep processing industries in the main ginseng producing areas, effectively promoting the coordinated development of the entire ginseng industry chain and all fields.

The Implementation Opinions of the People’s Government of Jilin Province on Accelerating the High quality Development of the Ginseng Industry in the Province propose to focus on supporting research on non-traditional medicinal parts, active substances or effective components, new structures, new targets or new mechanisms of action of ginseng, and accelerate the development of innovative ginseng drugs for intelligence, antiviral, anti myocardial ischemia, and coronary heart disease.  Accelerate the development of diversified and high-end ginseng whitening, moisturizing, skincare and other series of cosmetics and daily chemical products, actively cultivate high-quality and new brands of ginseng daily chemical products.  Applying biotechnology, bioengineering and other methods to accelerate the development of biological products such as ginseng enzymes, ginseng peptides, ginseng roots, and feed additives, further enhancing the comprehensive development and utilization level of ginseng.

(2) Resource advantage

Hydro-power Resources: Huadian City has three major water systems, namely the Second Songhua River, Second Songhua River, and Huifa River, connecting 251 small and medium-sized rivers. It is the most abundant area in Northeast China in terms of hydro-power resources, with a theoretical reserve of 2.5 million kilowatts and a exploitable capacity of 1.782 million kilowatts. The two famous hydroelectric power plants in Asia, Baishan and Hongshi, are located in Huadian, with a total installed capacity of 1.7 million kilowatts.

Ginseng resources: Huadian City, as one of the first 15 counties (cities) in the province where ginseng is grown, has a large ginseng planting area, especially in the under-story ginseng planting area, ranking among the top in the province. By 2024, there will be 7 large-scale ginseng and under-story ginseng planting and processing enterprises, 22 ginseng planting professional cooperatives, and 7 family farms. The total area of ginseng cultivation in the city is 6753 hectares. Among them, there are 6586 hectares of understory ginseng and 166 hectares of non forest ginseng. The expected output is 1,001 tons, with a production value of 170 million RMB yuan.

(3) Industrial advantages

Huadian has a good foundation in the traditional Chinese medicine industry, and is a “National Wild Ginseng Standardization Demonstration Zone” and a “National Traditional Chinese Medicine Planting and Seedling Breeding Base”, with an output value of 205 million RMB yuan in 2022. In 2023, Huadian deepened the implementation of the "11345" Traditional Chinese Medicine Project, with a focus on promoting the implementation of the Macao North Medicine Industry Integration Demonstration Base project with an investment of 2.5 billion RMB yuan. Projects such as the North Medicine Planting and Processing Demonstration Base, Traditional Chinese Medicine Beverage Processing Base, and North Medicine Trading Center will be built to strive for the development of the entire traditional Chinese medicine industry chain. In 2024, we deepened the implementation of the "11345" project to enhance the traditional Chinese medicine industry, actively carry out the application for the geographical indication of "Changbai Mountain Huadian Ginseng", rely on enterprises such as Huqingyutang and Huayao Biotechnology to promote the development and production of modern Chinese medicine, health products, and functional foods with medicinal and edible properties, and improve the comprehensive utilization level of authentic medicinal materials such as ginseng.

The Huadian Economic Development Zone Health Industry Park covers an area of 105000 square meters, with medicine and food as the leading industries, and is tailored as a standardized production and operation base for small and medium-sized enterprises. As of now, the first and third phases of the project have been completed and put into use, with 18 enterprises settling in, achieving a 100% occupancy rate. The park covers upstream and downstream enterprises such as food and medicine, forming a complete industrial chain and cluster.

(4) Talent advantage

There are a total of 9 universities stationed in Jilin City. There are nearly 100000 full-time students and about 30000 graduates from higher education institutions every year. There are about 61000 professional and technical talents and 496000 skilled talents in the city, including 144000 high skilled talents.

Huadian City focuses on traditional manufacturing and people's livelihood services, vigorously carrying out skill enhancement actions through vocational colleges and private training institutions, expanding the recruitment channels for skilled talents such as technical colleges, and completing vocational skill training for more than 40,000 people in recent years. At the same time, we will vigorously promote the improvement and increment of skilled talents, and currently reserve more than 1300 certified excellent skilled talents in the talent pool.

(5) Location advantage

Huadian City is located in the central area of Northeast Asia, adjacent to the Changjitu Development and Opening Pilot Zone, with a superior geographical location and convenient transportation. The urban area is 200 kilometers away from the provincial capital Changchun, 100 kilometers away from Jilin City, 180 kilometers away from Changchun Longjia International Airport, and 65 kilometers away from Jishen Expressway. Huadian is the geometric center of five prefecture level cities in Jilin, Liaoyuan, Baishan, Tonghua, and Yanbian. It is located within the two-hour economic circle of the surrounding major cities and has great potential to build a regional center city.

1.2 Contents and scale of project construction

1.2.1 Construction scale

After the completion of the project, the annual production of ginseng health drinks will be 2.4 million cases (6 × 500ml).

1.2.2 Construction content

The project covers an area of 16,000㎡ with a building area of 20,000㎡. It will purchase production line equipment and construct supporting facilities such as processing workshops, filling workshops, warehouses, research and development centers, inspection and testing centers, office buildings, and ancillary facilities.

1.3 Total investment of the project and capital raising

1.3.1 Total investment of the project

The total investment of this project is 100 million yuan, including construction investment of 80 million yuan and working capital of 20 million yuan.

1.3.2 Fundraising

Self-raising of enterprises

1.4 Financial Analysis and Social Evaluation

1.4.1 Main financial indicators

After the project reaches its production capacity, the annual sales revenue is 100 million yuan, the profit is 15 million yuan, the investment payback period is 9 years (after tax, including a construction period of 2 years), and the investment profit margin is 15%.

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

1.4.2 Social evaluation

The project aims to deepen the processing of ginseng, develop and apply ginseng health drinks, and promote the high-end extension of the ginseng industry chain.  At the same time, it will drive the large-scale planting of ginseng in Huadian City, form an industrial agglomeration effect, and continuously improve the efficiency and product added value of the ginseng industry.

1.5 Cooperative way

Joint venture, cooperation, sole proprietorship, other methods are negotiable.

1.6 What to be invested by the foreign party

Funds, other methods can be discussed face-to-face.

1.7 Construction site of the project

Huadian Economic Development Zone

1.8 Progress of the project

We are currently seeking external investment.

2. Introduction to the Partner

2.1 Basic Information

Name: Huadian Municipal People's Government

Address: 187 Huadian Street, Huadian City, Jilin Province

2.2 Overview

Huadian City is located in the southeast of Jilin Province, on the north side of the Longgang Mountains, upstream of the Second Songhua River, with Dunhua to the east, Jingyu, Fusong, and Huinan to the south, Panshi to the west, and Yongji and Jiaohe to the north. Covering an area of 6,624 square kilometers, with a length of 119.4 kilometers from east to west and a width of 101.7 kilometers from north to south, it is one of the larger counties (cities) in Jilin Province. The geographical location is 126 ° 16 ′ -127 ° 45 ′ E longitude and 42 ° 34 ′ -43 ° 29 ′ N latitude.  Huadian City has one provincial-level economic development zone, five streets, nine townships, and a total population of approximately 420,000 people. The city's population is mainly Han Chinese. In March 2001, it was designated by the Jilin Municipal Government as a pilot project for building medium-sized cities and granted partial prefecture level management authority.

As of the end of July 2024, Huadian Economic Development Zone has achieved a full caliber tax revenue of 352 million RMB yuan, a year-on-year increase of 24.5%, and a local level tax revenue of 110 million RMB yuan, a year-on-year increase of 13.2%.  The cumulative output value of large-scale industrial enterprises reached 1.388 billion RMB yuan, a year-on-year increase of 17.2%. One new large-scale industrial enterprise has been added, bringing the number of large-scale enterprises to 18, and the growth rate of the scale industrial economy has increased.

2.3 Contact Information

Postal code: 132400

Contact person: Zhang Hao

Tel: +86-432-66221983    

+86-13331700111

E-mail: swjxmk66221983@163.com   

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

Contact unit: Investment Promotion Service Center of Jilin Cooperation and Exchange Office

Contact person: Wang Yanchao

Tel: 86-15843218881