Driving industry development and comprehensive quality improvement through technological innovation

It is expected that by 2025, the main business income of China's flavor and fragrance industry will reach 50 billion yuan

During the 13th Five-Year Plan period, in the face of challenges in both domestic and international markets, especially the impact of the COVID-19 epidemic, China's flavor and fragrance industry has maintained a trend of healthy and sustainable development. As China's economic and social development is about to enter the 14th Five-Year Plan period, the China Flavor and Fragrance Cosmetics Industry Association organized industry experts to formulate the "14th Five-Year Plan for the Development of the Flavor and Fragrance Industry" (hereinafter referred to as the "Development Plan"). The Development Plan resolutely implements the central government's decisions and deployments, taking technological development, "three-product" development, cluster development, green development, and international development as the main lines to promote high-quality development of the industry. It further clarifies the guiding ideology, goals, and strategic measures for the development of the flavor and fragrance industry during the 14th Five-Year Plan period, drawing a beautiful blueprint for the development of the flavor and fragrance industry.

The Development Plan points out that during the 13th Five-Year Plan period, the scale of China's flavor and fragrance market has steadily grown. According to incomplete statistics from the association, in 2020, the domestic output of flavors was about 218,000 tons, with sales of about 16.8 billion yuan; the output of fragrances was about 317,000 tons, with sales of about 24 billion yuan. The average annual compound growth rate of the industry during the 13th Five-Year Plan period was 3%. Flavor and fragrance exports have fluctuated, but a trade surplus has been maintained in international trade. The overall operation of the industry is positive, with the number of enterprises and listed companies with an annual output value exceeding 100 million yuan continuing to increase. The impact of the epidemic on the industry has been overcome to the maximum extent. Meanwhile, multiple measures have been taken to accelerate talent cultivation, actively participate in exhibitions and industry exchanges, improve the strength of domestic flavor and fragrance enterprises, and continuously enhance their international competitiveness. The products and production levels of enterprises have steadily improved. During the 13th Five-Year Plan period, the scale of China's flavor and fragrance market accounted for about one-fifth of the global market, making it the world's largest supplier of flavors and a major consumer and production base of fragrances. This has injected impetus and vitality into the development of China's flavor and fragrance industry. Domestic flavor and fragrance companies have kept pace with the world's scientific and technological and industry development trends, learning and introducing advanced flavor varieties and production technologies from abroad, showing a good development trend. At the same time, the industrial agglomeration development has been further strengthened, paying more attention to green, coordinated, and sustainable development, and the degree of internationalization is also continuously strengthening. The industry association has actively played a bridging role, timely listening to the demands of industry enterprises, actively reflecting the voices of industry enterprises to the government, organizing industry information, industrial policies, industry technologies, and international economic and technological promotion and exchanges, organizing industry experts to do the formulation and revision of relevant national standards, industry standards, and group standards, further strengthening the construction of industry skilled personnel teams, and playing a leading role in urging enterprises to be self-disciplined and promoting industry development.

However, the industry still faces some problems, such as the weakness of common basic research, the lack of core competitiveness in the development and application of new products; intellectual property protection, disorderly low-end competition; disorderly expansion of traditional advantageous varieties, repeated construction; great regulatory pressure, lack of scientific regulatory measures; rising production and operating costs, decline in enterprise profits; increasingly fierce international competition, the impact of "double squeeze"; imperfect standards in some emerging sub-application fields.

The China Perfume and Cosmetics Association believes that China's flavor and fragrance industry is currently in a period of structural adjustment and shift, changing from pursuing speed growth to quality growth, with transformation and upgrading and changing the development mode becoming a turning point for the industry. On the one hand, it is the industry's development to a certain stage, and the independent transformation and upgrading; on the other hand, it is due to the passive adjustment caused by competition and regulatory pressures.

The Development Plan points out that during the 14th Five-Year Plan period, the development of the flavor and fragrance industry should take the implementation of China's overall layout of ecological civilization construction and green development as its basic principle, enabling the flavor and fragrance industry to actively integrate into the country's continuously deepening supply-side structural reforms, and into the international and domestic dual-circulation strategic link centered on building a domestic large cycle, striving to make the flavor and fragrance industry, a small industry, achieve great things in promoting the high-quality development of the flavor and fragrance industry, using the development of a small industry to leverage the development of a large market, and making due contributions to the national economic and social development during the 14th Five-Year Plan period.

The China Perfume and Cosmetics Association believes that the industry should follow the following seven principles: adhere to industrial structural adjustment and improve development quality; adhere to innovation-driven development and improve technological level; adhere to the integration of industrialization and informatization, and follow the path of new industrialization; adhere to green and low-carbon development, and follow the path of ecological civilization; adhere to market trends and develop green products that meet consumer trends; adhere to the brand strategy and cultivate more advantageous fragrance brands; adhere to industrial safety and build the industry's market position and competitive advantages.

The Development Plan also sets goals for the industry's development: By 2025, the main business income of China's flavor and fragrance industry will reach 50 billion yuan, with an average annual growth rate of more than 2%. The output of fragrances will reach 400,000 tons, and the output of flavors will reach 250,000 tons. Continue to improve the product structure, further adjust and optimize the proportion of fragrance products and flavor products in the industry's output value, and improve the added value of the industry. Promote the rationalization and upgrading of the flavor and fragrance industry structure. In terms of product quality, the qualified rate of flavor and fragrance production will reach more than 98%. At the same time, strengthen the core supporting role of informatization, increase investment in environmental protection facilities and environmental protection transformation, guide flavor and fragrance production enterprises to develop and promote the application of clean production technologies, and achieve the requirements of three-waste treatment and emission standards for the entire industry by the end of the 14th Five-Year Plan period.

To achieve the above goals, the Development Plan clarifies the tasks for the development of the industry during the 14th Five-Year Plan period, namely, to be market-oriented and grasp new product trends; to take enterprises as the main body and build a large-scale production base for natural flavors; to broaden the scope of application and strengthen research on new uses and safety; to carry out green process transformation of traditional bulk synthetic flavor products and develop new flavor varieties; to develop clean production and solve the survival crisis and future concerns; to promote the construction of digital and intelligent factories and build manufacturing advantages in the flavor and fragrance industry; to promote park-based production and integrate the resources of small and micro enterprises in the flavor and fragrance industry; to optimize the allocation of industrial resources and form the value chain of Chinese enterprises.

The Development Plan also puts forward a series of supporting policies and measures: attach importance to industrial safety and vigorously develop the national fragrance industry; formulate reasonable and effective export tax rebate policies for some raw materials or intermediates required for synthetic flavors; attach importance to technological innovation and increase research and development investment support policies; attach importance to standard construction and improve product quality; attach importance to intellectual property rights and increase the intensity of innovation protection; attach importance to scientific and effective supervision and avoid "one-size-fits-all" management; attach importance to the cultivation of professional skilled personnel and accelerate the reserve of high-quality personnel; attach importance to giving play to the role of industry organizations and strengthen the construction of industry platforms.

A relevant person in charge of the China Perfume and Cosmetics Association said that the flavor and fragrance industry has a high degree of correlation with downstream industries and a high technological content, and its industry characteristics are very prominent. The degree of industry development to a certain extent reflects the comprehensive development level of a country or region. During the 14th Five-Year Plan period, China's flavor and fragrance industry will continue to deepen its transformation and upgrading, driven by technological innovation to comprehensively improve the quality of industry development.