I See through Everything

Jiang Miao glanced at a document passed on from the secretary’s office.

"Haida Group?"

"Yes, that’s the partnership proposal they sent over this morning," his business secretary, Liu Deming, confirmed with a nod.

"Do you have any information on this company?" Jiang Miao asked as he read.

"I do." As a business secretary, Liu Deming knew to prepare materials in advance, lest he appear incompetent by being caught unprepared when his boss inquired.

He opened another file and said, "Haida Group is a well-known high-tech agribusiness conglomerate founded in Yangcheng in 1998. It has a registered capital of over 1.5 billion yuan, currently operates more than 600 subsidiaries with nearly 40,000 employees, and was listed on the Peng City A-share market on November 27, 2009. They are ranked among the top five in the global feed industry."

"Their business spans the entire modern agribusiness value chain, including feed, seedlings, animal health and vaccines, smart aquaculture, and food processing. The feed division is their main source of revenue, accounting for over 85% of their total income. This division covers aquatic feed, livestock and poultry feed, and aquatic feed premixes."

"A feed manufacturer?" Jiang Miao raised an eyebrow.

Liu Deming added, "They’re also a company we’ve worked with in the past. Our farm used to buy all its fish feed from them."

"And they want to partner with us to develop feed products?"

Liu Deming laid out the information he had gathered in a clear, organized manner. "Boss, their R&D capabilities are actually quite strong. They have a central research institute, three major R&D centers, and over ten R&D pilot bases. Their research team is composed of over 1,700 people with master’s degrees or doctorates. With over 4.6 billion yuan in R&D investment, they’ve developed a relatively mature technological framework. They currently hold more than 200 invention patents and are considered a domestic leader in areas like selective breeding of high-quality aquatic fry and the development of microbial agents."

Jiang Miao just smiled and shook his head. "If they were really that strong, they wouldn’t be coming to us for a partnership. Have you looked into their financials?"

"I have. Since they’re a publicly listed company, their financial reports are fairly easy to find."

"Tell me about it."

"According to their disclosed financial reports, their annual net profit was 2.436 billion yuan in 2024, a year-over-year decline of 11.13%. In 2023, it was 2.741 billion yuan, a decline of 7.31%. In 2022, it was 2.957 billion yuan, which was an increase of 80.74% year-over-year. This year’s report has not been published yet."

Jiang Miao looked at the numbers. ’Last year, Haida Group sold a total of 22.31 million tons of feed. Their feed business accounts for roughly 85% of their total revenue, which means 85% of that 2.436 billion yuan in profit—2.0706 billion yuan—came from their feed division.’

’This means that last year, the company only made an average of 92.8 yuan per ton of feed.’

Seeing this, he understood why Haida Group was in such a hurry to seek a partnership.

’The reason is that this year, the price of fish meal and fish oil has been driven up by a major production cut at the Peruvian Fishery. Market prices have been rising for five consecutive months.’

’Right now, Peruvian or Hokkaido fish meal with 67% crude protein content has a landed price of around 16,000 yuan per ton.’

’Likewise, soybean meal—another major commodity in feed production—has also seen a significant price hike this year. The current market price is 3,628 yuan per ton, up about 14% since the start of the year.’

’Under these circumstances, all the major feed producers are facing a severe crisis due to rising raw material costs.’

’But right now, none of the major producers can raise their prices significantly. The global feed industry is in a state of relative overcapacity, and everyone is trapped in a brutal, cutthroat race to the bottom.’

’Raising prices isn’t something a single company can do alone. You have to see if your competitors are willing to follow suit. Otherwise, you’ll just price yourself out of the market.’

’Every feed producer’s wholesale price is hovering right at the cost line, leaving them with razor-thin profit margins.’

Compared to other feed producers, Hailufeng Company’s advantages were glaringly obvious.

Control over the production of core raw materials.

A brand-new feed formula for high-efficiency aquaculture.

A monopoly in two niche fish feed markets.

For the first two months after Hailufeng Company started selling its feed, Haida Group didn’t notice anything amiss. It wasn’t until early November, while compiling the previous month’s regional sales figures, that they discovered a significant drop in their eel feed sales in the Eastern Guangdong Region. Only then did they hastily dispatch someone to investigate.

The investigation revealed that Hailufeng Company was now selling eel feed and Egyptian Catfish feed.

Upon further investigation, Haida Group’s sales department discovered that Hailufeng Company was a force to be reckoned with. Unlike Haida Group, which had to externally source its fish meal, fish oil, soybean meal, and corn each year, Hailufeng Company had already achieved partial self-sufficiency for its core raw materials.

As one of the giants in the feed industry, Haida Group’s R&D department was quite formidable. Using feed samples and information gathered by their sales department, they quickly conducted preliminary tests. They discovered that Hailufeng Company’s feed was not only formulated with extreme precision but also highly effective at reducing the feed conversion ratio and shortening the eels’ growth cycle.

Specifically, after a week-long feeding trial with the odor-reducing eel feed, they confirmed it effectively lowered the levels of geosmin in the eels.

This matter quickly came to the attention of Xue Hua, the Chairman and President of Haida Group.

Haida Group’s management team met for several days straight. In the end, they decided their first step should be to try and make contact with Hailufeng Company.

Initially, some executives had proposed acquiring Hailufeng Company, while others suggested simply copying their feed.

However, once they dug into Hailufeng Company’s background, all talk of acquisition or "borrowing" the feed formula ceased.