China New Borun's Comment on Competitors and Industry Peers
There is no dominant leader in our industry in the PRC but there are a few
manufacturers whose capacities are similar to ours. We compete primarily on
the basis of customer recognition and industry reputation, product price and
quality, ability to deliver our product on a timely basis, and a competitive
cost structure. We believe we can continue to compete successfully with our
competitors because of our product quality, competitive cost structure and timely
delivery of our product. In order to maintain and enhance our competitive advantages,
we must continue to focus on our competitive pricing through cost control, product
quality and improving our proprietary production processes.
We only compete with domestic companies and do not compete with any international
producers. Our major competitors include the other top 10 edible alcohol producers
in China such as Jilin New Tian Long, COFCO Zhaodong, Meihekou Fukang and Lianyungang
Dongcheng.
Although we believe that our competitive strengths provide us with advantages
over many of our competitors, some of our competitors may have stronger brand
names, stronger customer bases, greater access to capital, longer operating
histories, longer or more established relationships with their customers and
greater marketing and other resources than we do. If we fail to maintain or
improve our market position or fail to respond successfully to changes in the
competitive landscape, our business, financial condition and results of operations
may suffer.
We believe that we are currently the second largest producer of edible alcohol
in China in terms of total production capacity and production output of edible
alcohol. We believe our leading position plays an important role in negotiating
and securing contracts with customers and suppliers and recruiting talent. We
enjoy economies of scale over our competitors having a smaller production scale.
Accordingly, we believe these enhance our overall competitiveness and are important
to our future growth.