Chinese-U.S. Partnerships Offer Mutually Beneficial Opportunities

The United States and Chinese ingredient markets have a long history of joint commerce. Although U.S. regulatory oversight has tightened through the years—particularly with the Food Safety Modernization Act (FSMA) and increasingly strict requirements for foreign suppliers—unique synergies are providing new opportunities to collaborate along the ingredient supply chain.

Founded in 2000, Chenguang Biotech Group Co. Ltd. (CCGB) is a technological corporation specializing in natural plant extracts. Now with 20 subsidiary companies, CCGB is looking for resources to develop a “Made in America" line of botanical ingredients. The venture could signal a wave of Chinese-U.S. partnerships honing in on the latest industry trends.

CCGB sells its ingredients in the United States exclusively through IngredientsOnline.com, a B2B e-commerce platform for nutritional raw materials. When Lu Qingguo, CCGB’s founder, chairman and general manager, traveled to Iowa to research the new venture, he invited Sherry Wang—founder and president of IngredientsOnline.com—to join him.

“They visited Iowa looking to find resources to enhance CCGB’s existing line of herbal ingredients with a goal of planting herbal crops in Iowa for extraction here in a U.S. facility, making these products available to the U.S. supply chain all the way through the value chain to the U.S. consumer," explained Peggy Jackson, vice president of sales and marketing at IngredientsOnline.com. “Having Sherry attend these meetings was imperative, as they all work together to build the strength and confidence of the China/America connection. Taking steps to ensure both quality control and regulatory compliance is their number one goal."

During the trip, Lu and Wang met with Rick Kimberly, president of Kimberly Farms in Maxwell, Iowa. The weather in Iowa is ideal for the CCGB line of herbals, so conversations around the farm’s ability to plant CCGB crops cost-effectively were a hot topic.

Kimberly already has a special connection with China, having hosted President Xi Jinping (then vice president) at the farm in February 2012. Kimberly has been to China numerous times talking with agricultural officials on the U.S. farm model, and he recently hosted a group of nearly 20 Chinese think-tank researchers from Beijing.

Lu and Wang also met with Iowa’s Governor Terry Branstad, who has since become U.S. ambassador to China. CCGB had an existing relationship with Branstad, which will further strengthen the China/America connection moving forward.

Also on the agenda was a visit with Kevin Keener, Ph.D., director of the Center for Crops Utilization Research and the BioCentury Research Farm at Iowa State University. According to Jackson, Keener presented information about advanced technologies and equipment that could be used to enhance CCGB’s existing ingredients and production processes.

“In addition, there were conversations about the research department’s ability to discover more unique uses for CCGB’s existing ingredients," she said.

“The Iowa State University Center for Crops Utilization Research has been actively supporting companies in development of new processes and products for botanical extraction for many years," Keener shared. “We have over 250 unique pieces of equipment for drying, grinding, separation, concentrating and extraction. We provide assistance in the process and product development on over 100 research projects per year. Within these 100+ projects, there are approximately 10 percent that relate to botanical extraction. This could be a microbial produced active compound, enzyme, natural color, natural flavor, essential oil, etc. We also provide a test bed location for companies to pilot test new equipment and processes."

Keener noted the organization’s team of 10 technical staff has significant experience across the food and biomanufacturing industry, including botanical extraction. Past projects have involved the extraction of natural compounds for use in botanical products from sources such as soybeans, microalgae, mushrooms, marigolds, rosemary and egg yolks.

“Our Center’s focus is on the efficient collection, concentrating and activation of botanical compounds," Keener said. “We work closely with each client to understand their desired outcome and apply our expertise to build a ‘system solution’ that can provide accurate data for scale-up projections. Our pilot plant systems work best with volumes between 5-gallon (20 kg) and 500-gallon (2,000 kg) quantities."   

When asked why his firm is interested in developing a U.S. supply base, Lu responded, “We wish to make CCGB more localized in the United States than ever, for raw material cultivation and sourcing, manufacturing, research and development, and marketing."

He also acknowledged the large U.S. market potential and, as an emerging leader, his company’s desire to maximize compliance with U.S. policies and regulations.

Lu views the U.S. collaboration as a win-win for both countries, noting the potential growth and benefits available through CCGB’s expanding business strategy in the United States. It’s a model of healthy cooperation he maintains is sustainable.

Jackson concluded: “It’s very important for both CCGB and IngredientsOnline.com to develop a strong commitment to a solid U.S. footprint and U.S. relationships. Supporting America at the core—the farmer—is an ideal way to show that commitment, along with quality control at the supply-chain level."