1. Introduction to the Project

1.1 Project background

1.1.1 Product introduction

Ginseng is known as the “King of All Herbs” and “Oriental Divine Herb” due to its magical medicinal and health benefits. It is both medicinal and edible, with high medicinal value. It is used in various fields such as health products, cosmetics, food, beverages, gifts, ginseng cigarettes, ginseng wine, ginseng sugar, and ginseng tea, etc.

The project utilizes the excellent ginseng planting resources in Changbai County to produce organic ginseng flower tea, organic red ginseng tea, organic white ginseng tea, and organic American ginseng tea; Organic white ginseng slices, organic red ginseng slices, and organic American ginseng slices; Ginseng feed, ginseng tonic wine, and ginseng medicinal wine, etc., to achieve the maximization of ginseng utilization.

1.1.2 Market prospect

1. Development status of the ginseng industry

(1) Development status of the global ginseng industry

Ginseng is known as the “King of All Herbs” and “Oriental Divine Herb” due to its magical medicinal and health benefits. It is both medicinal and edible, with high medicinal value. In addition to being widely used in formula drugs, it has also entered various fields such as health products, cosmetics, food, beverages, gifts, ginseng cigarettes, ginseng wine, ginseng sugar, and ginseng tea, etc. In recent years, global ginseng output has steadily increased. In 2021, the global ginseng output reached 84,677 tons, and in 2023, the global ginseng production reached 97,321 tons. Currently, global ginseng is mainly produced in seven countries including South Korea, North Korea, Russia, the United States, Canada, Japan, and China. Among them, China accounts for more than 80% of the global output. Data showed that, the global ginseng market size was about 46.6 billion yuan in 2023. It is expected to maintain a steady growth trend in the coming years. By 2029, its market size will have approached 89.6 billion yuan, with a compound annual growth rate of about 9.6%.

(2) Development status of ginseng industry in China

In recent years, the output 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 accounted for 56.78%, Heilongjiang accounted for 28.63%, Liaoning accounted 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 yuan/kg in 2021, and about 120.6 yuan/kg in 2023.

From 2020 to 2023, the number of ginseng imports in China continued to grow due to the epidemic. The import volume reached about 90 tons in 2023, with a year-on-year growth of 21.8%. The import amount remained stable from 2022 to 2023, and was about US$ 32.29 million in 2023. From the source of imported products, in 2023, China’s ginseng imports mainly came from Canada, South Korea and the United States, of which Canada accounted for about 60%, South Korea accounted for about 26%, and the United States accounted for 15%. China is a large producer of ginseng. From the overall import situation of ginseng in China, the main imports in China are refined products with high import value, with small quantity but high added value; With the increase in domestic consumers’ income, there is increased requirement for quality of ginseng products, which will drive import of the industry. In general, the ginseng industry in China 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 Import Volume and Change Condition of Ginseng in China from 2017 to 2024 (unit: t, %)

From 2019 to 2021, the number of ginseng export in China continued to decline due to the epidemic, reaching a low point in 2021 in recent years. Since 2022, exports have continued to rebound, reaching about 2070 tons by 2023, with a year-on-year growth of 44%. The overall export amount of ginseng shows a W-shaped trend. It reached a recent low point in 2021, with an export amount of only US$ 240,000. The export amount continued to rise from 2022 to 2023, exceeding US$ 1.6 million in 2023, with a year-on-year growth 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 was Japan, accounting for more than 40%, followed by Hong Kong and Taiwan, China, accounting for 23.8% and 16.9%, respectively, while the other regions accounted for less than 5%. In terms of average export price, from 2017 to 2023, the average export price of ginseng fluctuated within the range of US$ 0.5-0.8/kg. The average export price has slightly increased in 2022, reaching about US$ 0.85/kg in 2023, but it was relatively stable on the whole. 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 destination, about 40% of China’s ginseng was exported to Japan, and the average export price was 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 export volume and amount of ginseng in China.

Table 2 Export Volume and Change Condition of Ginseng in China from 2017 to 2024 (unit: t, %)

(3) Development status of the ginseng industry in Jilin Province

As the largest province of ginseng output in China, ginseng industry is the most advantageous and most potential industry in Jilin Province. There are three main ways to plant ginseng in Jilin Province: deforestration for planting of ginseng, planting ginseng under forest, and non-forest planting of ginseng. Ginseng in Jilin Province is mainly distributed in four regions: Yanbian, Tonghua, Baishan, and Jilin, including more than ten major producing counties such as 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, and Huinan County, etc. To guarantee the quality of ginseng, Jilin Province has successively formulated 15 national standards and nearly 50 local standards in the field of ginseng. Meanwhile, it also provides standard and green planting plans for ginseng farmers. Like planting grains, Jilin Province has also comprehensively carried out soil testing and product testing and certification for ginseng planting. The average output of garden ginseng per square meter throughout the province has increased from 16 kilograms to 20 kilograms, with a merit factor of over 75%.

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

In recent years, focusing on the goal of building a strong agricultural province, Jilin Province has turned the ginseng industry into a 100-billion-scale industry, and constructed a new pattern of multi-point support, multi-industry development, and diversified development. In places such as Fusong, Ji’an, Jingyu, Tonghua, and Yanji, etc., it has formed an industrial belt dominated by ginseng, with emergence of many ginseng manufacturers and ginseng medicine enterprises. At present, Jilin Province has developed and produced more than 1,000 varieties of products in five major series including ginseng food, drugs, health products, cosmetics, and biological products, realizing the whole-plant development and utilization of ginseng.

2. Development prospect of the organic ginseng product industry

With the increasing quality of life and demand for health among Chinese citizens, the demand for organic food will also gradually expand. People are paying more and more attention to food health issues. In terms of drug selection, the focus has been shifted from chemical drugs to natural botanical drugs. In terms of disease prevention and treatment, the focus has been shifted from passive treatment to active prevention and health care. In terms of food, people are more inclined towards organic and green food. Ginseng has dual functions as medicine and health food. Fresh ginseng completely preserves the natural essence of ginseng (active ingredients of ginseng), which caters to people’s psychological needs, providing a broader development space for the deep development of ginseng in the field of drugs, health food, and new resource food (ginseng has been listed in the New Resource Food List).

1.1.3 Technical analysis

1. Ginseng tea

The main raw material of ginseng tea is fresh ginseng. In particular, it fully preserves the original juice of fresh ginseng without adding preservatives, and preserves the unique aroma and taste of ginseng. Like the drinking method of tea, it is convenient to drink and suitable for all seasons. It can greatly replenish the vitality and prolong life of the people.

The ginseng tea is prepared by taking ginseng as the raw material, then wash, clean, cut into slices, heat, and add honey, and then make mixing, concentration, sub-packaging and packaging.

2. Ginseng wine

Ginseng wine can be called the king of wine. This product supplement the people with ginseng polysaccharides and various nutritional trace elements while drinking alcohol, which can improve the micro-circulation tissues of the human body and enhance the ability to keep warm. It is suitable for middle-aged and elderly people, as well as people living in high-altitude areas and humid areas of water towns in South of Yangtze River.

The ginseng wine is prepared by taking manually planted fresh ginseng, cordyceps militaris and liquor as raw materials, soaking and filtering cordyceps militaris with liquor, then putting the washed and cleaned fresh ginseng into the filtered liquor in which the cordyceps militaris has been soaked, and then making sub-packaging and packaging.

1.1.4 Advantageous conditions of project construction

(1) Policy advantages

The Announcement of the State Administration for Market Regulation, the National Health Commission, and the National Administration of Traditional Chinese Medicine on Issuing the Catalogue of Three Health Food Raw Materials, including Ginseng, has formulated the Catalogue of Health Food Raw Material Ginseng, the Catalogue of Health Food Raw Material American Ginseng, and the Catalogue of Health Food Raw Material Ganoderma Lucidum, to further accelerate the research and development, production, and achievement transformation of ginseng health food; Expanded the application scope of ginseng for being a raw material of new food, to actively promote the healthy and sustainable development of the ginseng food industry.

The Notice of the General Office of the Jilin Provincial People’s Government on Issuing the 14^th Five-year Plan for the Development of Changbaishan Ginseng Industry proposed to rely on the construction of Changbaishan ginseng advantage characteristic industry clusters, to give full play to the leading and driving role of key leading enterprises, and vigorously develop ginseng food, drugs, health products, cosmetics, biological products, and wild mountain ginseng products, etc. We should focus on building a consortium for refined and deep processing industry of edible ginseng, medicinal ginseng, ginseng cosmetics, ginseng extracts, and specialty wild ginseng in the main ginseng producing areas, and effectively promote the coordinated development of the entire ginseng industry chain and all fields.

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

The Notice of the Office of the Baishan Municipal People’s Government on Issuing the Outline of “Healthy Baishan 2030” Plan proposed to promote the integration of health and food, increase scientific and technological innovation, and rely on Changbai Mountain resources and Baishan’s characteristic agricultural products to develop various health products such as green food, leisure food, health food, and organic food, etc. We should promote the refined and deep processing of agricultural products and food. We should promote the development and expansion of health food industry, and accelerate the cultivation and development of special diet, nutritional and medicinal diets and other characteristic functional food industries. We should implement the “Safe Meat” and “Healthy Rice” projects, deepen the construction of the Ginseng Industry Revitalization Project and Ten Million Tons Mineral Water Project, promote the refined and deep processing of fruits, wood, mushrooms and vegetables, as well as frogs, deer, poultry and fish, take the lead in establishing a food safety monitoring and traceability system, and build an important national green organic food base from a high starting point.

The Outline of the 14^th Five-Year Plan for National Economic and Social Development and Vision 2035 of Changbai Korean Autonomous County proposed to strengthen the development of ginseng food and health products, gradually restore and expand the scale of the ginseng industry, and establish the ginseng brand in Changbai region. We should accelerate the promotion of “homology of medicine and food”, accelerate the researches on bio-transformation technology, deeply develop a series of medicine health products such as ginseng drugs, health products, and cosmetics, etc., as well as ginseng convenience food and health food, focus on developing high-end refined and deep processing products such as TGpeptide, promote the construction of wild mountain ginseng deep processing projects, form a new type of ginseng processing industry dominated by refined and deep processing, comprehensively improve the processing level and product grade of ginseng, and promote the upgrading of the whole county's ginseng industry from being scale and quantity based to being intensive and quality based.

(2) Resource advantages

Hydropower resources: The controlled boundary river area in Changbai County is 2,497.6 square kilometers, the inland river area is 5,761 square kilometers, the total resource amount is 1.148 billion cubic meters, and the actual utilized water volume is 270 million cubic meters. The theoretical reserve of hydropower resources is 230,000 kilowatts, with a planned installed capacity of 162,300 kilowatts. Among them, the main stream of Yalu River, the boundary river, has a capacity of 127,000 kilowatts, and it is suitable for the development and construction of 7 power stations by the Chinese side, with a planned installed capacity of 58,300 kilowatts; The theoretical reserve of inland rivers is 102,800 kilowatts, with 51 planned power stations and an installed capacity of 84,486 kilowatts. There have been 28 power stations completed, with an installed capacity of 54,700 kilowatts (accounting for 64.74% of the planned installed capacity of inland rivers).

Characteristic industrial resources: Changbai County has a total of 943 species of medicinal plants in 136 families, including 112 species in 55 families that are included in capacity calculation, with a total reserve of 11,500 tons. The main wild genuine traditional Chinese medicinal materials include ginseng, Astragalus membranaceus, Schisandra chinensis, Acanthopanax senticosus, Codonopsis pilosula, and Asarum, etc., with a reserve of up to 1,597 tons. The preserved area of ginseng in the whole county is 3.92 million square meters, including 3.42 million square meters of ginseng and 500,000 square meters of American ginseng; The production area of ginseng as goods is 1.25 million square meters, and the total output of fresh ginseng is 3.66 million kilograms, including 3.3 million kilograms of ginseng and 360,000 kilograms of American ginseng. The artificial planting area of Schisandra chinensis has reached 11,231 mu in accumulation. The planting area of other small and medium-sized medicinal materials, mainly including Dioscorea nipponica, Adenophora stricta, and Asarum, etc., has reached 2,873 mu. There are about 20 varieties of products that comply with organic and green food standards within the county. Changbai County has completed organic certification for its Ganoderma tsugae, large-branch ginseng, jade fungus, and large cherries.

Land resources: Changbai County has a total area of 249,760 hectares, with a population density of 30 people per square kilometer, and an average per capita area of 1.22 hectares (excluding water area). The county has a total arable land area of 14,926.66 hectares, forest area of 220,880 hectares, grassland area of 6,840 hectares, garden area of 1,006.66 hectares, water area of 2,580 hectares, and other land area of 2,973.33 hectares. The Changbai Mountain Nature Reserve covers an area of 16,386.66 hectares within the county.

(3) Industrial advantages

Changbai County is one of the 15 “Key Development Areas for Standardized Ginseng Planting”, and one of the 6 “Ginseng Industrial Parks” designated by the Jilin Provincial Government. After more than 40 years of development, the ginseng industry in Changbai County has become a unique pillar industry. At present, the preserved area of ginseng in the whole county is 3.92 million square meters, including 3.42 million square meters of ginseng and 500,000 square meters of American ginseng; The production area of ginseng as goods is 1.25 million square meters, and the total output of fresh ginseng is 3.66 million kilograms, including 3.3 million kilograms of ginseng and 360,000 kilograms of American ginseng.

By now, Changbai County has passed the acceptance of the “National Changbai Mountain Green Ginseng Standardization Demonstration Zone” by the National Standardization Administration, and its ginseng industry has been moving towards the direction of being green and organic. In order to promote the overall promotion of green organic ginseng, Changbai County has comprehensively implemented the “Five Unifications” management model in ginseng production management: unified planning, unified technical standards, unified operating procedures, unified agricultural material procurement, and unified processing and sales; Has comprehensively promoted the unique comprehensive planting and cultivation technology system of high-quality and high-yield Changbai ginseng, including five times of light adjustment, formula fertilization, ginseng irrigation, continuous cropping and rotation of ginseng, and inter-cropping of forest ginseng, etc. in terms of production technology; Has issued the Opinions of Changbai County on Integration of Ginseng Industry in terms of resource management, clarifying that the focus of ginseng land resources should be tilted towards green and organic ginseng manufacturers, professional cooperatives, and national and provincial (municipal) ginseng planting standardization demonstration zones, and towards large-scale planting households with high per unit yield and excellent product quality.

Meanwhile, taking standardized production of green and organic ginseng as the core, Changbai County establishes a ginseng production technology promotion and service system, to provide strong technical support for the healthy, rapid, and sustainable development of the ginseng industry. In addition, led by associations and giving play to the role of professional cooperative economic organizations, and by introduceing leading organic ginseng manufacturers, Changbai County promotes the construction of green and organic standardization demonstration bases, expands and strengthens the green and organic ginseng industry, and improves the quality of ginseng products. In order to effectively promote the overall development of the ginseng industry, the Changbai County Government has effectively regulated the resources and established principles for the allocation of ginseng land resources, so as to drive the development of ginseng planting towards green, organic, high-tech, and high-quality directions, and promote the green and organic ginseng demonstration zone to rapidly cover the ginseng planting area in Changbai County.

(4) Talent advantages

There are 63,800 professional and technical talents in Baishan City; There are 13,000 highly skilled talents, including 39 young and middle-aged experts who have made outstanding contributions; and 13 top-notch innovative talents, having formed a talent team that has initially taken shape, with a relatively complete range of categories and gradually strengthened overall strength. There is Changbaishan Vocational Technical College in the urban area, which is a public ordinary university with higher education enrollment qualifications approved by the Jilin Provincial Government and registered with the national education system. The College is a multi-level and multi-class teaching-oriented higher vocational college that mainly focuses on higher education, takes into account secondary vocational education, and also carries out social training and vocational skills certification education. The College has 18 higher vocational majors for national enrollment and 12 secondary vocational majors for provincial enrollment. The College's training center offers skill training and vocational qualification education for over 30 projects in six major categories, with an annual training capacity of 5,000 person times.

(5) Location advantages

Changbai County is the frontier window of Jilin Province’s opening up to the outside world, and also an important node of China’s “The Belt and Road” Northeast Asia Economic Circle. It has 1 national-level border port and 3 temporary cargo passages, with complete port infrastructure. Over the years, it has been successively awarded the titles of National Culture Advanced County and National Civilized County, and has been named the “National Double-support Model County” for five consecutive times. It has also been honored with the title of National Ethnic Unity and Progress Model Collective for six times.

Baishan City has initially formed a modern three-dimensional transportation system that integrates comprehensive development of railway, highway, and aviation. It will form a 3-hour economic circle with Shenyang, Dandong, and Changchun. The Hegang-Dalian (Hegang-Dalian Expressway G11) and Changchun-Changbaishan (Fusong-Changchun Expressway S26) expressways have been completed and opened to traffic throughout Baishan City, and the Linjiang-Baishan-Changchun Expressway has officially opened to traffic; The Tonghua-Baihe and Dalian-Dalizi railways run through the north and south. Its railway transportation can reach all parts of the country; it can have a direct access to Dandong Port via railway and highway, with a highway distance of 320 kilometers.

1.2 Contents and scale of project construction

1.2.1 Construction scale

After the project is completed, it will process 800,000-900,000 jin of fresh ginseng and 50-70 tons of dried ginseng annually.

1.2.2 Construction contents

The project will purchase the old factory area of the original ginseng processing factory in Malugou Town to make reconstruction. The factory covers a total area of 12,177 square meters, with a construction area of 2,240 square meters. It will purchase production equipment, and construct supporting facilities such as production workshops, warehouses, drying rooms, washing workshops, dormitories, canteens, and water and power supply facilities, etc.

1.3 Total investment of the project and capital raising

1.3.1Total investment of the project

The total investment of the project is 150 million yuan, including the construction investment of 120 million yuan and current funds of 30 million yuan.

1.3.2 Capital raising

Raised by the enterprise itself

1.4 Financial analysis and social evaluation

1.4.1 Main financial indexes

After the project reaches the production capacity, its annual sales income will be 127 million yuan, its profit will be 19 million yuan, its investment payback period will be 10 years (after the tax, including the construction period of 2 years), and its investment profit rate will be 12.67%.

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

1.4.2 Social evaluation

The construction of the project will enhance the market competitiveness of Changbai County’s ginseng advantage characteristic agricultural products through processing, provide high-quality and efficient nourishing food for sub-healthy populations, and have significant social benefits in improving the people’s health conditions Meanwhile, the main raw material of the project, ginseng, is planted under the forest without damaging vegetation, which has effectively solved the problems of deforestation and serious soil erosion caused by ginseng planting in the garden, etc., being conducive to protecting the ecological environment. It has also improved the output benefits of the forest land, and has increased the farmers’ income and wealth while taking into account the ecological benefits.

1.5 Cooperative way

Joint venture, cooperation, or sole proprietorship, other ways can be discussed in person.

1.6 What to be invested by the foreign party

Funds, other ways can be discussed in person.

1.7 Construction site of the project

Changbai County, BaishanCity.

1.8 Progress of the project

It is in the process of investment promotion/

2. Introduction to the Partner

2.1Basic information

Name: Changbai Korean Autonomous County Commerce Bureau

Address: No. 64 Changbai Street, Changbai Korean Autonomous County

2.2 Overview

As a prefecture-level city under the jurisdiction of Jilin Province, Baishan City is located on the west side of Changbai Mountain, is adjacent to Yanbian Korean Autonomous Prefecture to the east, borders Tonghua City to the west, adjoins Jilin City to the north, and faces the Democratic People’s Republic of Korea across the Yalu River to the south. It is situated in the hinterland of Changbai Mountain, with the Longgang Mountains and Laoling Mountains diagonally running through the entire city. It belongs to the northern temperate continental monsoon climate, with a total area of 17,505 square kilometers. The city has 2 districts, 2 counties and 1 autonomous county under its jurisdiction, and 1 county-level city under its administration as an agent. As of the end of 2023, the population of the city has been 895,900.

Changbai County is located in the southeast of Jilin Province, at the southern foot of the main peak of Changbai Mountain and the source of the Yalu River. It is known as “The First County at the Foot of Changbai Mountain and The First City at the Source of the Yalu River”. Covering an area of 2,505.96 square kilometers, the county has jurisdiction over 77 administrative villages in 7 towns and 1 township, 1 provincial border economic cooperation zone, and 1 provincial diatomite characteristic industrial park. It is the frontier window of Jilin Province’s opening up to the outside world, and also an important node of China’s “The Belt and Road” Northeast Asia Economic Circle. It has 1 national-level border port and 3 temporary cargo passages, with complete port infrastructure. Over the years, it has been successively awarded the titles of National Culture Advanced County and National Civilized County, and has been named the “National Double-support Model County” for five consecutive times. It has also been honored with the title of National Ethnic Unity and Progress Model Collective for six times.

2.3 Contact method

Contact unit: Baishan Municipal Commerce Bureau

Contact person: Zhu Yuze

Tel: +86-439-3367020+86-15844990231