Thought to be one of the first Chinese firms to gain IP (identity preserved) certification from a third-party testing company, Fenchem has already signed new contracts for its soy-derived phytosterols, tocopherols and isoflavones with European customers.
The company makes around 60 per cent of its sales from the European market and its IP accreditation from the Swiss group SGS, announced at the FI Asia show in Shanghai in March, will increase its position in this market where consumers remain largely opposed to the idea of genetically modified ingredients.
Cindy He, sales representative with Fenchem, said the IP cert reflects the current shift among Chinese ingredient manufacturers towards improving quality and traceability, which allows them to set higher prices.
IP-certified products tend to be around 20 per cent more expensive than regular soy ingredients because of the difficulty in sourcing the raw material. Currently IP-certified sterols, at 95 per cent purity, cost around $17 per kg, compared to around $10-12 for the GM soy-derived product.
"In the past years, people have been concerned with the quality of Chinese products but now we have solved this problem with third-party testing and in-house laboratories that can control the quality of products in China," He told NutraIngredients.com.
IP certification programmes, which involve an annual audit by the testing company, are a significant investment for any soy product manufacturer, which must then continue to work against the global decline in traditional raw material to guarantee the IP status.
Prior to 1996, China was producing significant volumes of indigenous soybeans but once the government opened up its market to soy imports from the US and Brazil, farmers have planted more and more GMO soybean seed.
By 2003, one of the main production areas for soya in North China (especially Shangdong & Henan province) had virtually no indigenous soybean left.
Nanjing-based Fenchem says it established a solid supplier chain of indigenous soybean grown in the north-east of the country.
"Non-GM material is still decreasing but there is a small area that the government would like to protect. It has realized that indigenous Chinese soy is necessary to the future of our soy industry," He told NutraIngredients.com.
The firm will also benefit from lower production costs than international competitors, offering its products at prices up to 20 per cent cheaper.
It currently produces 20 metric tons of sterols per month and 10 tons of D-alpha tocopherol. Increasing output will be closely determined by raw material supply.
Some of the new IP-certified products will be on display at Vitafoods in Geneva next month.