Businessweek

China New Borun Corporation, through its subsidiaries, operates as a producer and distributor of corn-based edible alcohol in the People’s Republic of China (PRC). The company’s edible alcohol products are primarily sold as an ingredient to producers of baijiu who further blend its products into finished products sold under various brand names. Products and Primary Markets The company’s principal product is corn-based edible alcohol. During the production of edible alcohol, the company also produces distillers dried grains with solubles high-protein feed (DDGS feed), corn germ, crude corn oil, and liquid carbon dioxide as by-products, which are sold separately from its edible alcohol. Edible Alcohol Edible alcohol is a colorless, transparent solution of ethanol or a mixed solution of water and ethanol that is produced through the filtration and refined distillation of fermented grain and yeast. The company produces its edible alcohol through the distillation of fermented corn. Edible alcohol is an organic product used in various industries to produce a range of other products, including alcoholic drinks, cleaning solvents, perfumes, cosmetics, dyes, medicines, and fuel. A portion of the company’s customers are in the chemical industry and use edible alcohol for chemical products, such as acetic acid and glycol. A small number of its customers are in the pharmaceutical industry, where edible alcohol is used as disinfectant, preservative, or a feedstock to produce different organic agents. DDGS Feed DDGS feed is a high-protein by-product of edible alcohol, which contains proteins, fats, amino acid, vitamins, and various kinds of minerals. DDGS feed, a digestible protein and energy source for beef cattle, could be used in turkey and swine applications and acts as a feed for both feedlot and dairy cattle. DDGS feed is also fed to poultry and its use is increasing in the pork industry. DDGS feed is formed through a distillation, evaporation, and drying process, which occurs after microbial fermentation of corn in the process of edible alcohol production. In the production of edible alcohol, only starch from the corn is used and the remaining nutrients (such as protein, fiber, and oil) are used to produce DDGS feed. The primary market for the company’s DDGS feed includes sales to feed processing factories, which provide DDGS feed to poultry, livestock, and fish. Corn Germ Corn germ is a food product, which is created through the process of isolating the embryo buds in corn by removing the outer covering and starch. Corn germ contains nutrients in the corn kernel. Corn germ contains various vitamins and nutrient contents, including vitamin E, magnesium, and calcium. The primary market for the company’s corn germ includes sales to corn oil-producing enterprises. Crude Corn Oil Crude corn oil is used to produce edible corn oil, which is sold to corn oil producers. Liquid Carbon Dioxide Liquid carbon dioxide is used in oil exploitation to improve oil recovery, primarily in the tertiary phase of oil exploitation, and as a food additive by the food and beverage industry. Customers The company’s customers are primarily local baijiu distilleries and chemical industries in Shandong and Heilongjiang provinces. It sells its edible alcohol to 38 customers. Sales and Marketing The company’s sales teams in Shandong and Heilongjiang provinces market its products directly to its customers. It has expanded its sales of edible alcohol to customers in Sichuan, Anhui, Jiangsu, Hebei, Jilin, and Liaoning provinces. Strategies The company’s business strategies are to continuously improve product mix; customer diversification; continuous expansion of production capacity—construction of phase IV of its Daqing facility; opportunistic acquisitions; and continuous improvement of its Borun wet process. Research and Development The company spent approximately Renminbi 432,300 ($68,609.2) during the year ended December 31, 2011 on company-sponsored research and development activities, including all activities in respect of its in-house developed Borun wet process. Intellectual Property The company has obtained two Trademark Registration Certificates from the Trademark Office of the State Administration for Industry and Commerce in respect of its two Trademark Applications respectively and it is also under application for other trademarks. The company registered the domain name of www.chinanewborun.com, which is used to support its business and promote its Group. Environmental Regulations The major PRC environmental regulations applicable to the company include the Environmental Protection Law of the PRC; the Environmental Impact Appraisal Law of the PRC; the Law of the PRC on the Prevention and Control of Water Pollution; the Law of the PRC on Prevention and Control of Air Pollution; the Law of the PRC on Prevention and Control of Environmental Pollution Caused by Solid Waste; and the Law of the PRC on Prevention and Control of Environmental Noise Pollution. The major PRC regulations related to work safety applicable to the company include Work Safety Law of the PRC and Regulation on Work Safety License. Competition The company’s major competitors include Jilin New Tian Long; COFCO Zhaodong; Meihekou Fukang; and Lianyungang Dongcheng. History China New Borun Corporation was founded in 2000.