Sail across the sea

Chapter 512 Unwavering for a Hundred Years

“Let’s talk about our own business,” Gao Fan said, changing the subject. “I’ve thought it over. The company’s direction will remain unchanged. We will continue to focus on fine chemical products and pursue a high-tech, high-value-added approach.”

When Gao Fan brought up the company's direction, Gu Kunquan and Fu Yiming both stopped their wandering thoughts and began to listen attentively, as this was a major issue concerning the company's development strategy for the next ten or twenty years.

Gao Fan continued:

"Our company's advantage lies in its strong R&D capabilities, enabling us to continuously launch products with high added value. Our disadvantage is that, as a private enterprise, it is difficult for us to undertake large-scale investments. In addition, there are various restrictions imposed by national policies."

"Therefore, I believe that, at least in the short to medium term, we do not need to compete with state-owned enterprises and foreign giants in the bulk chemical market. Instead, we should focus on producing a range of fine chemicals, capturing several niche markets, and forming a virtuous cycle between research and production."

Chemical products can generally be divided into two categories: one is called bulk chemicals, or general chemical products, and the other is fine chemical products.

Bulk chemicals include basic chemicals, synthetic materials, and agrochemicals. They are characterized by large-scale industries, large investments, relatively mature product technologies, low added value, and fierce market competition.

The output of bulk chemicals is usually measured in tens of thousands of tons. Sometimes, the annual production capacity of a single production unit can reach millions of tons, and the investment required for such a unit can reach several billion yuan.

Fine chemical products are very diverse, including pesticides, dyes, coatings, pigments, reagents, electronic chemicals, food and feed additives, adhesives, surfactants, catalysts, functional polymer materials, and daily chemical products. They are produced on a relatively small scale, with a high degree of market segmentation, rapid technological changes, and high added value.

The products Gao Fan produced when he started his business, including chemical cleaning agents, vitamins, and several types of coatings produced by Xinglong Chemical, all fall under the category of fine chemicals.

Gao Fan chose to produce these products mainly because they required low investment, had a fast start-up time, and could quickly accumulate capital. If he had to start with a million-ton-level ethylene plant, even if he had a golden finger as thick as Mount Wuzhi, he wouldn't have been able to do it.

Another reason for choosing fine chemicals is that the technology in this field updates very quickly, which is most suitable for a time traveler like Gao Fan who has mastered a lot of technology from later generations.

In contrast, for bulk chemicals such as ethylene and urea, the composition of the products remains constant, and technological changes mainly occur in the production processes. For users, there is no difference between products produced by different processes, making it difficult for Gao Fan's technical know-how to translate into a competitive advantage in the market.

In recent years, Canghai Chemical has been steadily developing around two main products: vitamins and chemical cleaning agents. Using the profits from these two products, Gao Fan has organized a research team, including teachers and students from Peking University, to continuously develop new products as the company's technological reserves.

Gao Fan possessed a prescient ability inherited from later generations, enabling him to pinpoint the direction of scientific research. Coupled with sufficient research data, the speed at which he produced results was extremely rapid. Meanwhile, the vitamin factory, having adopted a domestically pioneering two-step fermentation method and various process improvements, achieved production costs significantly lower than international giants like Germany's Lloyd's and the US's Wright. This allowed them to continuously erode the traditional market share of these major companies, and they have already gained a certain reputation in the international vitamin market.

The technology of chemical cleaning agents has been iterated six or seven times. Each time, a new generation is launched just as foreign competitors develop similar products, thus maintaining a leading edge.

This is because the market for daily consumer goods relies heavily on brand marketing, and a small company like Canghai Chemical cannot compete with internationally renowned companies in terms of brand promotion. As a result, it has only gained a very small market share so far.

However, even a small share of the international market is enough for Chinese companies. Chemical cleaning agents alone generate tens of millions of US dollars in export revenue annually, making them a key export product in Maolin Province.

Another product, under the chemical cleaning company, is an upstream product of chemical cleaning agents. It consists of several different types of surfactants, which are very typical fine chemical products.

One of the surfactants was developed by Gao Fan's roommates in dormitory 449, with Wu Zixian contributing the most. It is an activator used in oil extraction to activate and dilute viscous oil, and it has already been sold to countries such as Canada and Venezuela.

Another type of surfactant can reduce the surface tension of water, thereby improving the water's ability to adsorb dust, and is used for dust removal in mines. Gao Fan first heard about this product at Zeyan Institute. Later, he came up with some ideas and worked with the engineers at Zeyan Institute to improve the product, resulting in a significant performance improvement. It now occupies 30% of the domestic mine dust removal market.

All these products share a common characteristic: they target a niche market and stand out by leveraging cutting-edge technology. The production processes are relatively simple, requiring minimal investment and yielding quick results, making them ideal for small and micro-sized private enterprises like Canghai Chemical.

Okay, the term "micro and small enterprise" was actually used by Gao Fan internally within the company. If he dared to call his company a micro and small enterprise outside, he would be drowned in spit.

Your vitamin factory has an investment of over 20 million US dollars and generates over 100 million US dollars in foreign exchange annually. If you call yourself a small and micro enterprise, how are provincial enterprises with assets of less than 10 million RMB supposed to put themselves in a position?
But Gao Fan also has his own reasons. Compared to the Fanjiawan mining and fertilizer project, which had a budget of 17 billion yuan but an actual investment of 23 billion yuan, Canghai Chemical's claim of being a small and micro enterprise seems reasonable, right?

For example, the province is planning a large-scale fertilizer plant. A 30-ton synthetic ammonia and 52-ton urea plant would cost 23 billion yuan under the natural gas option and 35 billion yuan under the coal-water slurry option. Gao Fan's entire assets wouldn't be enough to build even one such plant.

Gao Fan knew what a large-scale chemical industry was. In later generations, chemical projects with investments of less than 100 billion yuan wouldn't dare call themselves major projects. Gao Fan didn't want to compete with the state in terms of investment; he would stick to small and micro-sized enterprises and remain steadfast in this for a hundred years.

If Canghai Chemical could have 100 products like Vitamin C, and make each one a world leader, Gao Fan wouldn't be afraid of anything, not just Lowe's or Wright's, but even if all the surnames in the world were combined.

(End of this chapter)