34.2 The Neem Tree Industry Empower the Poor with Green Technology in China

Genia Kostka , Department of International Development, University of Oxford, Oxford, England
Jianghua Zhou , School of Economics and Management, Tsinghua University, Beijing, China
The Neem Tree Industry – Empower the Poor with Green Technology in China

This paper analyzes the benefits and challenges of producing natural pesticide in China, using a case study of Nanjing Jiu Kang Biological Science and Technology Development Limited Company, with the purpose of exploring how the private sector can empower farmers with green technologies. The objective is to provide insights and learnings from the case example and make further suggestions for the whole pesticide industry. The findings are based on fieldwork conducted during February 2009 to April 2009, published government statistics, and analysis of secondary literature.[1]

Starting by analyzing industrial trends in China’s pesticide and crop protection industries, this paper shows that the intensive appliance of chemical agricultural inputs in China has resulted in soil degradation. Furthermore, rapidly price increases in agricultural inputs led to the decrease of farmer’s income. Addressing these two trends, Nanjing Jiu Kang Company became one of the pioneers in China’s underdeveloped natural pesticide industry. Since 2001, Nanjing Jiu Kang Company developed new technologies to make natural pesticide from neem trees, which potentially will benefit both farmers and the environment. The case study illustrates that public-private partnerships were key for the company’s early stage of R&D and for the commercialization of research findings in viable business models. With support from the Nanjing municipality government, Nanjing Jiu Kang was able to get sufficient loans to implement its ambitious innovation plans, and to considerably shorten the approval application process.

The new developed technology of Nanjing Jiu Kang provides multiple advantages to farmers. First, it offers natural pesticide as an alternative to current chemical pesticide. In addition, it offers additional income for farmers by providing the new possibility to plant neem trees, previously plant of little value. However, the case study further illustrates difficulties and challenges emerging throughout the project. Most critically, it is still uncertain whether the company’s end product offers real benefits in the long term to farmers and the environment. Threats include, among others, price levels and effectiveness of natural pesticide. In response to these questions, this paper explores similar cases in other countries to highlight main barriers of development of natural pesticide and how they were overcome. The paper concludes with some suggestions on how to address current business threats for the Nanjing Jiu Kang Company specifically, and for China’s natural pesticide industry in general.

[1] The companies activities were first mentioned in a case example in Tsinghua 2008’ case competition, funded by Management Scientist (guanli xuejia), a Chinese management journal.