Frost & Sullivan insights Recently, there have been frequent violations of regulations by nucleic acid testing institutions. On June 7th, the official website of the National Medical Products Administration issued the 'Notice on Further Strengthening the Quality and Safety Supervision of COVID-19 Testing Reagents' (hereinafter referred to as the 'Notice'), bringing the nucleic acid testing industry into 'the strictest supervision'. Analyst Xu Chao from Frost & Sullivan (Frost & Sullivan, abbreviated as "Frost & Sullivan") Recently, an interview with Huaxia Daily was conducted to jointly interpret how the 'strictest regulatory order' will affect the nucleic acid testing industry. Huaxia Times Recently, there have been frequent violations of regulations by nucleic acid testing institutions. In response, the National Medical Products Administration has taken strong action to implement responsibilities, and the nucleic acid testing industry has faced 'the strictest supervision'.   On June 7, the official website of the National Medical Products Administration issued the 'Notice on Further Strengthening the Quality and Safety Supervision of COVID-19 Detection Reagents' (hereinafter referred to as the 'Notice'). The Notice requires that drug regulatory authorities at all levels continuously strengthen quality supervision during the product development phase for COVID-19 detection reagents, strictly implement the main responsibilities of enterprises and users, and strictly enforce local government supervision responsibilities. Registrants of COVID-19 detection reagents must effectively strengthen quality management throughout the entire life cycle of their products and legally assume responsibility for the safety and effectiveness of the products during the entire process of research, production, operation, and use. Frost & Sullivan analyst Xu Chao Xu Chao, a consulting analyst at Frost & Sullivan and interviewed by China Times, stated that overall, the 'Notice' has taken a step towards continuous supervision of the entire process in guiding and motivating COVID-19 testing reagent companies to carry out safe and effective research and development, production, and business operations. With the implementation of this 'Notice', it further promotes healthy competition and favorable development in the COVID-19 testing industry. chaos Before the COVID-19 pandemic, in the in vitro diagnostic (IVD) market, molecular diagnostics related to COVID-19 nucleic acid testing did not occupy a large market share. It was not until 2020 that the market for nucleic acid testing expanded. According to Tianyancha, in just 2021 alone, there were 437 new medical laboratory-related institutions added.   An insider from a third-party peer institution in Beijing told the Huaxia Times, "The PCR technology used for COVID-19 nucleic acid testing has been outsourced by third-party medical laboratories and genetic testing companies for a long time, and was once operated as a marginal project with low throughput."   As the COVID-19 black swan rages on, the nucleic acid testing market has expanded rapidly in the past two years. At the beginning of August 2020, according to the Ministry of Industry and Information Technology, as of the end of July 2020, China's daily nucleic acid testing capacity had reached 4.84 million samples, with 4,946 medical institutions capable of conducting nucleic acid testing and more than 38,000 technical personnel involved in testing.   On May 13, 2022, Guo Yanhong, an inspector from the Medical Administration Bureau of the National Health Commission, stated at a press conference of the State Council's Joint Prevention and Control Mechanism that there are 13,100 medical and health institutions nationwide capable of conducting nucleic acid testing. The country has 153,000 professional technicians engaged in nucleic acid testing technology work, and the nucleic acid testing capacity can now reach 57 million tests per day per tube.   In comparison, in less than two years, the number of medical institutions in China capable of conducting nucleic acid testing has increased by nearly 160%. In response, the aforementioned individuals stated, 'In the IVD industry, nucleic acid testing mainly utilizes molecular biology methods and belongs to the subfield of molecular diagnostics. This field is not the mainstream market in the testing industry, with a relatively small demand. The segments that account for a higher proportion in the IVD track include biochemical diagnosis, immunodiagnosis, blood cell testing, and other sub-markets.'   In response to changes in market demand, companies within the industry have quickly made adjustments. However, both enterprises and capital are driven by profit-seeking motives. Therefore, behind the rapid growth, various chaotic phenomena have emerged.   It has been reported that multiple third-party testing institutions in Beijing, Hebei, Henan, Anhui, and other places have falsely reported results and been placed under investigation for suspected criminal offenses. The suspects have been taken into compulsory measures. Among these cases, there are many instances where testing institutions are suspected of violating the Law on the Prevention and Control of Infectious Diseases, with most violations involving the forgery of test results. Just taking Beijing as an example, in May 2022, three cases were exposed: artificially diluting samples to affect the accuracy of test results, which is suspected of constituting a crime against the prevention and control of infectious diseases.   "The demand for nucleic acid testing has increased, requiring more operators and occupying machines. In this situation, enterprises can only find ways to compress costs. Third-party institutions operate on a self-financing basis, and it is difficult to rely solely on corporate self-discipline under the premise of profit-making. This requires higher-level units to strengthen supervision and professional units to assist in supervision, thereby promoting third-party institutions to conscientiously and responsibly complete nucleic acid testing tasks. Nowadays, with large-scale and regular nucleic acid testing, enterprises need to bear significant labor and financial costs, which even affect the expansion of other businesses, but the income is minimal," the aforementioned person further revealed.   On May 21st, the Beijing Fangshan District Government website updated administrative penalty information, showing that due to the original test data being significantly less than the number of samples tested, Pushe Medical was revoked its 'Medical Institution Practice License' by the Fangshan District Health Commission. On June 6th, the Fangshan Branch of the Beijing Public Security Bureau charged seven suspects including Zhou Moumou and Wu Moumou with the crime of obstructing the prevention and control of infectious diseases, and requested the approval of the Beijing Fangshan District People's Procuratorate for their arrest. After examination, the procuratorial organs made an arrest approval decision against Zhou Moumou, Wu Moumou, and the other six individuals on suspicion of obstructing the prevention and control of infectious diseases according to the law.   On the afternoon of May 27th, Pan Xuhong, Deputy Director of the Beijing Public Security Bureau, reported that since April 25th this year, 'Beijing Jinzhun Medical Laboratory Co., Ltd.' has been illegally conducting tests on nucleic acid samples collected from multiple districts using multi-tube mixing methods. They artificially diluted the samples, affecting the accuracy of the test results and are suspected of violating the crime of obstructing the prevention and control of infectious diseases. Wang Moumou (male, 43 years old), the legal representative of the laboratory, and 16 others were arrested, and the case is under further investigation.   On May 28th, according to the WeChat account of 'Safe Beijing', it was discovered that 'Beijing Zhongtong Lanbo Medical Laboratory' was suspected of illegal and criminal activities during nucleic acid testing. Currently, the Beijing police have filed a case against the laboratory for investigation, apprehending the legal representative Zhang Moumou and others, and the case is under further work.   regulation Against this backdrop, on June 7th, the General Administration of Drug Supervision and Administration of China issued the 'Notice on Further Strengthening the Quality and Safety Supervision of COVID-19 Detection Reagents'. The 'Notice' proposes to implement 'the strictest supervision' for COVID-19 detection reagents, taking resolute and effective measures. It strictly enforces the main responsibilities of enterprises and users, as well as the local supervision responsibilities of local governments. Vigorous and meticulous supervision work will be carried out without relaxation, firmly holding the bottom line of quality and safety, consolidating hard-won supervision achievements, and providing strong support for epidemic prevention and control.   Specifically, the 'Notice' proposes 'four strictest' measures and 'three major requirements'. Drug regulatory authorities at all levels should earnestly implement supervision and inspections, and delve deeply into and investigate issues and clues discovered in supervision sampling, complaints and reports, online monitoring, risk consultations, etc. For illegal and irregular activities such as unlicensed production and operation, improper storage and transportation, or the use of unregistered or expired COVID-19 test kits, they should be dealt with strictly, swiftly, and according to law. If suspected of constituting a crime, they should be promptly transferred to the public security organs. Supervisors suspected of dereliction of duty should be promptly transferred to the discipline inspection and supervision organs.   The 'Notice' specifies that provincial drug regulatory authorities should, in accordance with the requirements of previous work, maintain regular supervision. They should continue to organize professional forces to conduct supervision and inspections on registrants of COVID-19 test reagents and their entrusted manufacturers within their jurisdictions. The authorities should supervise enterprises to strictly organize production in accordance with regulations, specifications, standards, and the technical requirements of registered products, ensuring that the quality management system remains compliant. Special attention should be paid to inspecting the source of product raw materials, standardization of production processes, product quality control, release from factory and market, adverse event monitoring, product quality analysis and evaluation, etc. If serious violations are found in production activities that cannot ensure product safety and effectiveness, the enterprise should be ordered to immediately suspend production, recall problematic products, and carry out effective disposal. In cases where the violation is particularly serious, the medical device production license should be revoked according to the law, and relevant responsible persons should be punished according to the law.   Drug regulatory authorities at all levels should continue to strengthen the quality supervision and random inspection of COVID-19 testing reagents. For COVID-19 testing reagent products produced by registrants and entrusted manufacturers within their jurisdiction, full coverage random inspections should be carried out in accordance with the special sampling plans formulated by the national bureau. For products that fail the supervision and random inspection, drug regulatory authorities should immediately take corresponding disposal measures, ordering the enterprise to suspend production, analyze the reasons for non-compliance and carry out rectification. Production can only resume after being re-inspected and found compliant by provincial-level drug regulatory authorities.   The municipal and county drug regulatory departments should, in accordance with their responsibilities, effectively strengthen the supervision of product quality and safety during the use of nucleic acid testing reagents for COVID-19. They should carefully inspect whether the product qualifications, procurement channels, expiration dates, etc., of nucleic acid testing reagents used by medical institutions (including third-party medical laboratories) meet the requirements and whether the quality is qualified. If any illegal or non-compliant activities are found, they should be promptly reported to the relevant departments.   In this regard, Xu Chao analyzed that 'since the COVID-19 pandemic, the state has issued multiple notices to strengthen the quality and safety supervision of COVID-19 testing reagents, including the previous 'Notice on Carrying Out Special Inspections of COVID-19 Testing Reagents', 'Notice on Carrying Out Special Sampling Inspections of COVID-19 Testing Reagents', and 'Notice on Further Strengthening Supervision and Inspection of COVID-19 Testing Reagents'. These regulatory measures have effectively promoted the implementation of corporate responsibilities and regional supervision, and strengthened the quality and safety of COVID-19 testing reagent products.' *This article is reprinted from 'Huaxia Times', authored by Guo Yilin, with the original title 'The Scattered Phenomena of COVID-19 Nucleic Acid Testing: The National Medical Products Administration Issues the 'Strictest Supervision Order''.

6 month 7 On the same day, the Consulate General of Canada in Guangzhou held an online sharing session themed "Discovering New Opportunities in China's Medical Device Market".   Frost & Sullivan Frost & Sullivan Mao Hua, Partner and Managing Director of Frost & Sullivan's Greater China Region, was invited to attend and deliver a speech.   Mr. Mao Hua first introduced the overall development overview of the Chinese medical device market, followed by a brief analysis of opportunities foreign companies have in the Chinese medical device market.   He stated that China has become the world's second-largest medical device market, but China's per capita expenditure on medical devices is only one-ninth of that of the United States. There is still tremendous growth potential in China's medical device market.   Mao Hua pointed out that compared with the market share of global and Chinese medical device sub-sectors, low-value consumables still account for a relatively high proportion in China. However, orthopedic devices, ophthalmic devices, dental devices, plastic surgery devices, etc., which have a high global market share, still have significant development potential in China. In addition, the characteristics of China's 'economy-oriented' and 'high-end' medical device markets provide different market opportunities for import manufacturers. The 'economy-oriented' market places more emphasis on quality and value-added services under price sensitivity, while the 'high-end' market focuses more on technological innovation and solving clinical pain points. Therefore, even under the general trend of 'domestic substitution', multinational medical device companies still have growth opportunities in the Chinese market.   China has become the world's second-largest medical device market, while China's per capita medical device spending is nearly one-ninetyth that of the United States, demonstrating great growth potential. The Chinese medical device market has a low industry concentration and lacks large companies with strong brands and multi-product line layouts.   Low-value consumables still account for a relatively high market share in China, while ophthalmic devices, dental devices, orthopedic devices, and plastic surgery instruments, which account for a relatively high global share, still have great room for development in China.   The medical device market in China exhibits the characteristics of 'economical' and 'high-end', providing different market opportunities for multinational corporations.   Small foreign companies can leverage their technological advantages to target high-barrier fields and gradually establish brand advantages in the 'high-end' market.   Finally, Fred Mao said that multinational corporations can adapt to the local 'economic' markets through domestic plant construction or investment mergers and acquisitions.

Frost & Sullivan Insights In recent years, with strong support from national policies, specialized and innovative enterprises have continued to expand in scale and are accelerating their entry into the capital market. According to Wind Information data statistics, as of June 6th, this year, 32 specialized and innovative enterprises have successfully listed on the A-share market, raising over 40 billion yuan in initial public offerings. What are the attractions of the Sci-tech Innovation Board (STAR Market) for specialized and innovative enterprises? How do you view the concentrated listing of specialized and innovative companies in the machinery and equipment industry this year? Why are companies in the electronics industry favored by capital? What measures need to be improved to support the listing of specialized and innovative enterprises? Dr. Wang Xin, a global partner and President of Greater China at Frost & Sullivan (Frost & Sullivan, abbreviated as "Frost & Sullivan"), recently spoke with Securities Daily to discuss the listing path for specialized and innovative enterprises.   Securities Daily Q: What are the attractions of the STAR Market for specialized and innovative enterprises?   Dr. Wang Xin: Listed companies on the STAR Market often base themselves on technological innovation, providing an important driving force for the active development of China's market economy through a business model that combines "hard technology" + "technological model innovation." Especially since the "14th Five-Year Plan," the state has further encouraged the development of technology-driven real economies, treating high-tech and strategic emerging industries as a core link in promoting the high-quality development of China's economy. Whether it is the theme guidance of "technological innovation" or "hard technology," these align with the development positioning of specialized and innovative enterprises. As key technology researchers and industry leaders, hard-core technology itself is the foundation for enterprise commercialization. From the perspective of capital market development, the STAR Market is one of the best platforms for specialized and innovative enterprises to achieve further integration and upgrading from the innovation chain, talent chain to the scaled industrial chain and market capital chain.   In addition, the proportion of institutional investors on China's STAR Market is relatively higher, resulting in less market volatility, which can better protect the long-term corporate value of technology-driven enterprises and reduce value fluctuations during certain years or cycles. Therefore, it seems that specialized and innovative enterprises and the STAR Market platform develop and achieve together more so than against each other. Q: How do you view the concentrated listing of specialized and innovative companies in the machinery and equipment industry this year? Why are companies in the electronics industry favored by capital?   Dr. Wang Xin: The innovation, research and development, application, and commercialization of technology often require a certain development cycle, especially from product technology innovation to commercial verification, which requires sufficient market practice validation. Only when the commercial capabilities and profitability potential of technology companies are recognized by market investment can they receive greater affirmation in the secondary capital market.   Looking at the market development in 2021, industries such as smart cities and smart manufacturing in China have reached a mature commercial stage after several years of cultivation. Compared to other technology-driven companies, the business models of the electronics industry and machinery and equipment industry are basically mature, the profitability of enterprises has been widely verified, and investor education is more mature. Therefore, in recent years, "smart" manufacturing companies have received much attention from capital.   Q: What measures need to be improved to support the listing of specialized and innovative enterprises?   Dr. Wang Xin: From the perspective of enterprise services and product positioning, compared to general consumer enterprises whose products and services are closer to daily life, the product service models of specialized and innovative enterprises are more abstract and profound, often conveying new product service concepts to investors and the public. In this case, general investors often need a relatively mature vertical background in the industry to "understand" the core business essence and market development potential of specialized and innovative enterprises, thereby making a reasonable assessment of them.   However, on the other hand, managers and founding teams of specialized and innovative enterprises often focus deeply on technology itself, with insufficient investment in product service education, resulting in very limited market education effects. Eventually, actual market education still mainly focuses on internal communication, bringing pain points such as opaque industry information and difficult-to-understand company product positioning to general investors. To solve this problem in the future, specialized and innovative enterprises need to collaborate more with their respective industries, inviting professional institutional investors and industry analysis experts to discuss and explain innovative products and emerging models on a larger scale, and conducting market education for companies from three dimensions: company business, industry characteristics, and performance explanation.   In addition, with the continuous deepening of China's green economy strategy, technology-driven specialized and innovative enterprises need to better showcase their social value to various sectors of society, transmitting sustainable business models through the ESG development concept of the "green engine." This will also help improve the risk resistance capabilities of enterprises, optimize valuation results, and form a good development mechanism.

Frost & Sullivan insights On May 19, Laoxiangji submitted its prospectus to the Shanghai Stock Exchange. The prospectus shows that the company has 991 direct-operated stores and 82 franchise stores. During the more than two years of continuous pandemic, Laoxiangji's store count increased from 769 at the end of 2019 to 1,073 by the end of 2021. However, the operating conditions of newly established subsidiaries outside the province in the past two years have not been very satisfactory. The issue of expanding profitability is facing Laoxiangji. Analyst Wang Zilun from Frost & Sullivan (hereinafter referred to as 'Frost & Sullivan') was interviewed by the Economic Observer to discuss how catering chain brands represented by Laoxiangji can make an impact in national expansion and how they can enhance their brand competitiveness. Laoxiangji IPO: The Dilemma of National Expansion and Competitiveness Economic Observer As the company was sprinting towards an IPO, Laoxiangji fell into a labor dispute over unpaid social insurance for its employees.   On May 30, media reports stated that in the past three years, Laoxiangji had a cumulative total of 16,000 employees who did not pay social insurance. On the afternoon of May 31, Su Congxuan, Chairman of Laoxiangji, posted on Weibo in response saying, 'As of the end of 2021, there were a total of 14,503 employees at Laoxiangji (1,033 of whom are rehired retirees), and 12,629 of them actually purchased social insurance. The actual participation rate of Laoxiangji employees has reached 93.75%. Although there are factors such as a high turnover rate among catering workers and some employees not having a strong willingness to participate in insurance, as the Chairman of Laoxiangji, I feel very ashamed and self-reproachful for failing to purchase social insurance for all employees. I express my deep apologies to all my employees and the general public.'   In fact, this situation has been explained in the prospectus. The prospectus shows that in 2021, the number of employees of Laoxiangji who were insured was 12,629, with 1,874 employees not paying social insurance, including 1,033 retirees who were rehired.   National expansion In 2003, KFC's number of stores in China exceeded 800, and it launched a landmark localized flavor adaptation product—Lao Bei Chicken Wraps, which has continued to this day. It was also in 2003 that a Chinese fast-food chain named 'Fuxi Old Hen' (the predecessor to Laoxiang Chicken) opened its doors in Hefei. Nineteen years have passed, and while KFC has now surpassed 8,000 stores, 'The No.1 Fast-Food Chain in China' still remains elusive. Laoxiang Chicken, which has grown to over 1,000 stores, is racing to claim the title.   On May 19, Laoxiangji Chicken submitted its prospectus to the Shanghai Stock Exchange. The prospectus shows that from 2019 to 2021, Laoxiangji Chicken's operating income was RMB 2.859 billion, RMB 3.454 billion, and RMB 4.393 billion respectively; the net profit attributable to the parent company was RMB 159 million, RMB 105 million, and RMB 135 million respectively.   The prospectus shows that the company has 991 direct-operated stores and 82 franchise stores. Over the past two years or so when the pandemic continued, Laoxiangji's store count increased from 769 at the end of 2019 to 1,073 by the end of 2021. In terms of growth, in addition to the expansion into the Anhui market, the development of markets outside the province such as Shanghai, Hubei, Jiangsu, and Shenzhen also contributed to the increase.   However, the operating conditions of newly established subsidiaries outside the province in the past two years have not been very satisfactory. Many subsidiaries in multiple locations such as Zhejiang, Guangdong, Beijing, and Henan have fallen into losses, with a total loss amounting to 162 million yuan. Taking Zhejiang Laoliangji Catering Co., Ltd. as an example, its net profit for 2021 was -1,390 yuan, while Laoliangji (Beijing) Catering Co., Ltd.'s net profit for 2021 was -20.22 million yuan.   Jiangsu and Hubei markets, which Jiangsu Fortune Capital has been involved in since 2017, have yet to achieve profitability. The prospectus shows that the subsidiaries in Jiangsu and Hubei incurred losses of 38.99 million yuan and 38.42 million yuan respectively in 2021.   The issue of expanding profitability is facing Laoxiangji. In fact, compared to the localized exploration of Western cuisine, Chinese cuisine needs to face up to a more refined requirement of localizing flavors. Zhang Jian, an expert in brand positioning and general manager of Red Arrowhead Brand Marketing Company, told reporters that there are still no truly national Chinese fast-food brands. One major constraint is the localization of flavors. If one wants to win the national market, products need to conform to local tastes, which is very important for Chinese cuisine. In this regard, Hunan and Sichuan's cuisine has an advantage, as 'spicy' and 'hot spicy' flavors have been proven to be national tastes with high acceptance. Frost & Sullivan analyst Wang Zilun pointed out that many local catering brands focus on local consumers and maintain relatively high foot traffic with lower unit prices. Therefore, for large chain Chinese fast-food brands like Laoxiangji, how to use a standardized menu to dominate the national market is a problem, as well as how to build barriers to prevent competitors from engaging in price wars. However, regarding the current national expansion of Laoxiangji Chicken, industry insiders believe that there is no need to worry too much about losses in markets outside the province. Zhang Jian stated that on one hand, Laoxiangji Chicken has indeed been affected by the pandemic, resulting in fewer customer visits. On the other hand, Laoxiangji Chicken's influence outside the province has not yet been fully established.   Next, internal cultivation The national expansion of Laoxiangji will continue to accelerate. The prospectus shows that Laoxiangji plans to open 700 new stores in key regions across the country in the future. However, with Anhui accounting for over 70% of its revenue, where does Laoxiangji's competitiveness lie when entering new markets?   Laoxiangji stated in its prospectus that, with the increasingly fierce homogeneous competition in the catering industry and consumers seeking new and innovative experiences, brand and culture have become the core competitiveness of catering enterprises.   Since the beginning of 2020, when the video 'Chairman Su Congxuan tears up a staff letter' has attracted widespread attention, Laoxiangji has frequently appeared on hot search lists, including local flavor strategy press conferences and the daily release of Weibo posts featuring 'cooing'.   Wang Zilun stated that when standardization, chain operation, and the provision of high-quality dishes have almost become a necessity for every catering enterprise, if catering businesses want to stand out, they also need to enhance their brand awareness and the transmission of brand culture that is deeply rooted in people's hearts. Judging from the current expansion achievements of Laoxiangji Chicken, there is still a long way to go before its brand awareness can be fully established.   In addition to this, the internal cultivation of catering enterprises also lies in multiple aspects including product power, standardization, and management. The catering report from LeadLeo Research Institute shows that these three are the core elements for the success of Chinese chain fast-food enterprises.   When discussing the direction of internal cultivation for catering brands, Wang Zilun stated that first and foremost, the brand needs to have good marketing capabilities to expand its influence. Secondly, the brand should also make appropriate local adaptations. Furthermore, balancing the speed of expansion with costs is also a crucial point. Generally speaking, having a relatively complete process-based and scaled system is one of the effective ways to ensure both an expansion rate and cost reduction. According to the '2021 China Chain Restaurant Industry Report', the chain restaurant penetration rate in China reached 15% in 2020, which represents a significant improvement compared to the United States and Japan where the chain restaurant penetration rates have already reached 54% and 49%, respectively.   The report from LeadLeo Research Institute points out that in addition to the diversified demand for Chinese cuisine, backward supply chain levels are also one of the factors contributing to the low degree of chain operation in China's catering industry. Currently, there are issues such as overly dispersed upstream operations, long supply chains, and a low prevalence of cold-chain logistics in the entire catering industry. Facilities such as central kitchens, cold-chain transportation, and ingredient bases need continuous upgrading.   Various constraints also make investors pay more attention to the brand's ability to break through in these areas. Wang Zilun stated that for catering chain brands, building their own central kitchens and cold chain transportation systems, creating upstream and downstream connection resources, and utilizing digital information technology can all become ways for them to reduce costs and increase efficiency in standardization and chain operation. These are also important factors when evaluating an investment target for a catering brand. Regarding Laoxiangji, according to the prospectus, Laoxiangji plans to raise 12 billion yuan through listing on the Shanghai Stock Exchange this time, which will be used for the construction of the East China headquarters, new catering outlets, and data informatization upgrades. Laoxiangji stated in its prospectus that the project for the East China headquarters will help enhance the company's central kitchen capacity; the new catering outlet construction project will help improve the national store layout; and the data informatization upgrade project will help strengthen the company's intelligent management level.   Frost & Sullivan Insight & Extended Readings   Q: Can the development of Laoxiangji in its early stages be understood as Laoxiangji standing firm amidst the wave of Western fast-food brands due to its healthy and light Chinese cuisine?   A: With people's increasingly fast-paced lifestyles, fast-food forms that are prepared and served quickly are gradually gaining popularity among consumers. However, as consumers pay more attention to their physical and dietary health, Western-style fast food, which mainly consists of fried foods, can no longer fully satisfy consumers' pursuit of healthy eating. In this context, Chinese-style fast food, characterized by 'healthiness, lightness, and convenience', has gradually developed.   In recent years, several Chinese fast-food brands such as Laolongjian, Rural Base, and Lao Niangjiao have been actively expanding their market presence through listing; among them, the number of Laolongjian and Rural Base stores has now exceeded 1,000, indicating that the influence and popularity of Chinese fast food have increased among consumers. In addition to its name, which suggests healthy dining options like chicken soup and chicken dishes, Laolongjian's core competitive advantage also lies in its integrated upstream breeding industry, slaughtering, processing, and retail business. Through the healthy cuisine at its restaurants and an integrated full industrial chain, Laolongjian has established itself in China's catering market.   *This article is reprinted from the Economic Observer Network, with reporter Ye Xinran. The original title was 'Laoxiangji IPO: Difficulties in National Expansion and Competitiveness'.

Frost & Sullivan insights On May 30, the Operation Monitoring and Coordination Bureau of the Ministry of Industry and Information Technology released the operating conditions of the Internet and related service industries from January to April 2022, showing that platform enterprises mainly providing life services (including local life, car rental, travel, financial services, automobiles, housing, etc.) saw a year-on-year business revenue decrease of 20.2%, with the decline expanding by 2.8 percentage points compared to the first quarter. Cai Jinfeng, Executive Director of Frost & Sullivan Greater China, was interviewed by South China Morning Post to discuss the reasons behind the widening revenue decline of Chinese internet companies in the life service sector. Nanhua Morning Post Q: 'The revenue decline of enterprises in the life service sector has widened. From January to April, the business income of platform companies mainly providing life services (including local life, car rental and booking, travel, financial services, automobiles, housing, etc.) decreased by 20.2% year-on-year.' What are the reasons behind the widening revenue decline? " Cai Jinfeng Executive Director, Greater China, Frost & Sullivan   Cai Jinfeng: There are actually three main reasons for the significant decline this year. On one hand, it is due to the recurrence of the epidemic in various regions at the beginning of 2022, which has had some negative impacts on these enterprises related to living services. For example, travel: In 2021, the overall epidemic control was stable, and national tourism demand grew rapidly, with related enterprises gradually easing their underestimation from 2020. However, in 2022, due to the sporadic and local outbreaks of the epidemic, especially in popular destinations such as Jilin, Shanghai, and Yunnan, weak tourism consumption dragged down the entire tourism economy, further putting pressure on these travel-related businesses. Enterprises related to car rental and booking are also restricted because in cities where the epidemic occurred, residents' daily travel frequency has greatly reduced, and travel/business trips have been limited, affecting the demand for car rental and booking. This is why the revenue of these enterprises has also shown contraction. The impact of the epidemic on certain cities has exacerbated the shortage of automotive chips and the reduction in automobile parts production, leading to a decline in both automobile production and sales. As a result, automobile brands have also significantly reduced their advertising and promotion expenses, affecting the revenue of these platforms.   Secondly, 2021 was a relatively stable year for China, and the overall consumer-related market actually rebounded significantly. As a result, the year-on-year data decline appeared quite large. Lastly, due to the suspension of the online education sector, which had been developing rapidly under this category, in mid-2021, the revenue from all lifestyle-related platforms also showed a significant decrease.

Under the pandemic, many COVID-related concept stocks have ridden on the wave, and sectors related to COVID's industrial chain, such as testing, drugs, and vaccines, have also seen significant growth. What is the current market situation? And which investment opportunities are worth paying attention to? 2022 year 5 month 27 On the day, the third session of the Big Health Cloud Afternoon Tea, organized by the New Shanghai Business Medical Industry Sub-association, was successfully held. The theme of this event was 'Investment Strategies and Layout in the COVID-19 Industrial Chain'.   Frost & Sullivan Frost & Sullivan Mao Hua, Partner and Managing Director of Frost & Sullivan's Greater China Region, was invited to attend and delivered a speech on the current market situation and development trends of COVID-19 vaccines. Mao Hua said that the global COVID-19 situation remains severe, with domestic outbreaks occurring at multiple locations. New strains are emerging with stronger immune evasion and transmission rates. The new wave of spread has intensified the urgent need to increase vaccine coverage and iterate vaccines. It is difficult to eliminate the novel coronavirus in a short period.   Establishing a herd immunity barrier through vaccination, slowing down the rate of virus mutation, and protecting high-risk groups are the most effective measures to deal with the normalization of the epidemic. The main technical routes for COVID-19 vaccines globally are showing a parallel trend with multiple approaches. Among them, the development of four vaccine types is progressing most rapidly, namely   Inactivated vaccines, viral vector vaccines, recombinant protein vaccines, mRNA vaccine   , bringing more possibilities to the vaccine selection for recipients. The vaccines already on the market in China use inactivated vaccines, viral vector vaccines, and recombinant protein vaccines, with heterologous technologies mRNA The domestic research and development of the vaccine is still in the clinical stage, and it is expected to fill the current gap in this type of vaccine in China. To meet the urgent needs of epidemic control, the development of COVID-19 vaccines has been proceeding at an unprecedented pace in vaccine history. According to Mao Hua, under normal circumstances, the development process of a vaccine is long, typically taking from antigen identification to market launch. 10 - 15 A year, while the COVID-19 vaccine has only been in use 1 Less than a year.   "The multi-stage acceleration and upgrade during development has facilitated the rapid market launch of vaccines, and the feasibility of efficient development will fully mobilize enterprises' enthusiasm for innovation," said Mao Hua. The vaccine industry chain is vertically integrated, involving multiple fields. It is characterized by wide coverage and numerous processes. The COVID-19 pandemic has driven rapid development in industries and enterprises with a high degree of association with the vaccine industry chain.   Mao Hua believes that the high-end R&D and industrialization of vaccines in China still heavily rely on imports for key instruments, equipment, raw materials, etc. Achieving high-quality domestic substitution will ensure the autonomy and controllability of the entire vaccine industry chain, enhancing the stability and competitiveness of the vaccine industry chain.   At the same time, the pandemic has promoted the overall development of the upstream and downstream of the vaccine industry chain: COVID-19 vaccine research and development are in full swing, with vaccines gradually coming onto the market and shipments increasing. This has driven demand for products such as cell culture media, CXO and related fields are developing rapidly. Data shows that there are already 38 The COVID-19 vaccine has been approved. Among them, subunit vaccines account for the largest proportion. 11 Including vaccines WHO Global List of Essential Medicines. Currently, China has 7 The COVID-19 vaccines approved for conditional marketing or emergency use are mostly inactivated vaccines. With mature technology and R&D production experience, the frequency of adverse reactions is relatively low. Mao Hua pointed out that the COVID-19 pandemic has driven vaccine exports. Before the outbreak, China's vaccine export intensity was low.   2021 In 2021, China's vaccine exports both in quantity and value increased significantly, with its COVID-19 vaccine exports ranking second globally.   China has become the main supplier of COVID-19 vaccines to developing countries , The export targets are mainly low-income countries in Central Asia and Southeast Asia, as well as South America and North Africa.   In addition, the COVID-19 pandemic has changed the competitive landscape of pharmaceutical companies: mRNA Vaccines have made their way onto the historical stage, with excellent protection rates. Two mRNA Vaccine sales far exceed those of other COVID-19 vaccines. 2021 year Cormirnaty Global sales reached as high as 410 Billions of dollars, and Pfizer has also used this to become the pharmaceutical company with the highest drug sales. According to a Frost & Sullivan survey, the global current situation is 75 country, targeted at 199 Vaccine candidates are being developed and rolled out 704 Phase clinical trial; 37% Research products entering clinical trials III Periodically, traditional subunit vaccines account for the largest proportion, followed by new mRNA Vaccine research and development is in full swing. China's pipeline of COVID-19 vaccines includes nebulized inhalation vaccines. mRNA Vaccines account for the largest proportion, among which Aibo Biotech has made the most progress, with its product entering clinical trials. III In the meantime, CanSino Biologics, which has already launched COVID-19 vaccine products, has also recently obtained mRNA Clinical approval document for COVID-19 vaccine. Currently, global regulatory authorities FDA , EMA , NMPA Policies have been introduced one after another, allowing COVID-19 vaccines to be approved for emergency use authorization or conditional marketing. Policy incentives and market demand will jointly drive breakthroughs in vaccine technology.   "In the future, COVID-19 vaccines need to make breakthroughs in vaccine protection efficacy, long-term protection capabilities, and large-scale production capacity. Solving these challenges will further drive the vigorous development of the industry," Mao Hua concluded. Subsequently, under the chairmanship of Dou Dan, co-founder and chairman of Shanghai Trace Investment Management Co., Ltd., Mao Hua, together with Li Bin, a specially appointed professor at the School of Medicine of Shanghai Jiao Tong University and deputy director of the Shanghai Institute of Immunology, Ye Feng, co-founder of Shanghai Xiading Investment Management Co., Ltd., and Ye Weitao, managing partner of Shanghai Lize Investment Management Co., Ltd., held a wonderful roundtable dialogue between scientists and investors focusing on three highly socially concerned issues: 'The scientific principles of viruses, the feasibility of vaccine drug research and development, and the socio-economic problems brought about by epidemic prevention measures.'

Frost & Sullivan insights In the first four months of this year, China's software business revenue increased by 10.8% year-on-year, making it one of the few industries that maintained a high growth rate despite the impact of the pandemic. On May 25th, People's Daily published an article calling on the domestic software industry to firmly grasp the initiative in innovation and development, enhance their sense of crisis, strengthen their confidence in innovation, and win broader development space by combining research with application. What is the reason for the rapid growth of the software business? Which sub-sectors have driven the rapid development of this industry in recent years? At present, which software technologies in China are subject to foreign control? How should governments and enterprises respond to gain the initiative? Dr. Wang Xin, a global partner at Frost & Sullivan (referred to as 'Frost & Sullivan') and President of Greater China, recently spoke with Nanhua Daily to discuss the current development status of the software industry.   Nanhua Morning Post Q: In the first four months of this year, China's software business revenue increased by 10.8% year-on-year. It is one of the few industries that have maintained a high growth rate despite the impact of the pandemic. Could you explain the reasons for this rapid growth?   Dr. Wang Xin: In recent years, the dividends of national policies have been continuously released. The high-quality development of the software industry has risen to a national strategy, and the independent innovation capabilities of local enterprises have been greatly enhanced, completing a transformation from scratch. Product performance has approached the international medium level. Against the backdrop of accelerating domestic substitution, the domestic software industry is entering a golden acceleration period from 1 to N. It not only occupies more market share in the domestic market but also gradually begins to go global, competing with overseas manufacturers in high-end markets.   On one hand, the pandemic has accelerated the digital transformation of enterprises and public sectors. Mature domestic operating systems, databases, and office software are widely used in government affairs, enterprises, education, and other fields. Online handling of government affairs and enterprise collaboration have become the new normal after the pandemic.   On the other hand, China possesses a vast and complete industrial system. The fierce competition in the global industrial chain has made the digital transformation of the industrial production side an urgent necessity. As the 'brain' of factories, industrial informatization software platforms can significantly shorten product delivery cycles and help enterprises effectively reduce costs and increase efficiency. In addition to the industrial sector, domestic software has formed large-scale and in-depth applications in fields such as energy, manufacturing, telecommunications, finance, retail, etc., jointly promoting the steady growth of the software market. Q: What are the main sub-sectors that have driven the rapid development of the software industry in recent years? Cloud services? Industrial Internet platforms? Which companies have performed outstandingly? " Dr. Wang Xin: With the continuous deepening of digital transformation in Chinese enterprises and the gradual improvement of related IT infrastructure, the cloud service industry in China has developed rapidly. The annual compound growth rate over the past five years has reached over 30%, and its proportion of total IT expenditure in China has been continuously increasing. Cloud service providers represented by Huawei Cloud, Alibaba Cloud, and Tencent Cloud have all achieved significant growth. On the other hand, as the world's largest manufacturing country, China has a huge market space for industrial software, with market growth rates significantly faster than the global average. The technological gap between domestic and foreign manufacturers is continuously narrowing, and their market share is gradually increasing.   Q: The People's Daily article 'Let More Domestic Software Show Their Skills' mentions 'Practice has repeatedly told us that key technologies cannot be obtained through purchase or negotiation.' What are some examples of how we have been turned away from Western key technologies?   Dr. Wang Xin: Taking the chip industry as an example, although China has numerous chip design manufacturers, the industrial software used for chip design mainly comes from abroad. For instance, leading global market share holders of EDA industrial software are all from the United States. If foreign companies stop licensing and using EDA chip design software, the R&D work of domestic chip design manufacturers will be severely affected.   Q: At present, which software technologies in our country are subject to foreign control? How should the government and enterprises respond to gain the upper hand?   Dr. Wang Xin: Although there are a wide variety of application software in our country, the basic software industry is relatively weak compared to developed countries and has long been in a state of 'being controlled by others'. Domestic basic software does not have a deep enough understanding of core technologies, and there are still certain gaps between its product performance, user experience, stability, and maturity with mainstream foreign products. Enterprises related to the ecosystem lack in-depth cooperation, making it difficult to form systematic application capabilities, and an industrial ecosystem that develops healthily has not yet been formed.   In this situation, the government needs to strongly encourage the development of professional talents, increase investment in basic software fields such as operating systems, databases, and middleware to fill the talent gap. At the same time, it is necessary to strongly support basic software R&D enterprises to help them overcome difficulties in research and development investment. On the other hand, enterprises within the industry need to be patient in gradually breaking through key technologies and developing into capable enterprises with unique competitiveness. Basic software technology has high technical barriers and requires substantial investment, necessitating long-term accumulation of technical experience. Therefore, both the state and enterprises need long-term joint efforts to create a virtuous cycle of 'government, industry, academia, research, and application' so as to truly gain the initiative in the field of software technology.

Frost & Sullivan insights According to recent data from the Shanghai Shipping Exchange, the Shanghai Export Container Freight Index has maintained a downward trend for 14 consecutive weeks. Moreover, two of the world's major shipping giants are bearish on freight rates in the second half of the year. Recently, Hapag-Lloyd hinted that spot freight rates may drop significantly in the second half; earlier, Maersk also expressed an optimistic attitude towards spot freight rates in the second half of the year during a corporate telephone conference following the release of its first-quarter financial report. What are the main reasons for the decline in container freight rates? What is the outlook for freight rates in the post-petroleum market? Wei Li, Executive Director of Frost & Sullivan's Greater China Region Recently, an interview with Securities Daily was conducted to jointly interpret the future trend of the container market. The freight rates for popular routes dropped by about 60%, and shipping giants pulled out of the market to protect their freight prices   Securities Daily The super-long cycle of container shipping, which has been on fire for two years, may have reached an inflection point. According to recent data from the Shanghai Shipping Exchange, the Shanghai export container freight rate index has maintained a downward trend for 14 consecutive weeks.   "Currently, the volume of cargo is decreasing. For the Asia to West Coast route, the spot freight rate for standard containers has remained at around $6,500, a reduction of about 60% compared to the peak of $20,000 last year," said an unnamed shipping industry insider to the Securities Daily on May 18th.   Moreover, the two global maritime giants are bearish on freight rates for the second half of the year. Recently, Hapag-Lloyd hinted that spot freight rates for the second half of the year may drop significantly; earlier, Maersk also expressed an optimistic attitude towards spot freight rates for the second half of the year during its corporate conference call following the release of the first-quarter financial report.   Has the demand inflection point arrived? The freight rates for popular routes dropped by about 60% The supercycle of consolidated transportation that had persisted for some time may have temporarily come to an end.   On May 16th, data from the Shanghai Shipping Exchange showed that the comprehensive freight rate (CCFI) for container shipping rose by 1% week-on-week last week (May 9th - May 13th, the same below), marking a cumulative decline of 15% since mid-February. Among them, the freight rate on the US West Coast route rose by 3% week-on-week compared to the CCFI (reflecting the settlement price of container shipping companies); SCFI (reflecting the booking price of container shipping companies) remained unchanged; and FBX (reflecting the clearing price of freight forwarders) decreased by 12%. To power Executive Director, Greater China, Frost & Sullivan Regarding the main reasons for the decline in container freight rates, Wei Li believes that Frost & Sullivan's Executive Director for Greater China has identified several aspects. "Since early this year, the epidemic prevention and control situation in some domestic regions has been unstable. The various control policies triggered by the escalation of the epidemic have posed a huge challenge to the supply chains of various industries, affecting manufacturing shipments and overall maritime trade volumes. This has changed the situation where 'containers are hard to find' globally since the second half of last year. During the prevention and control period, the volume of fixed containers decreased compared to previous years, affecting container freight rates. On the other hand, since the second half of last year, major shipping companies have continuously increased their fleet layout, opening more near- and far-ocean routes. With container capacity exceeding demand, prices have declined. Furthermore, changes in consumer behavior brought about by international situations and the ongoing inflation in Europe and America have also indirectly triggered maritime trade and freight rates." In terms of demand, since the beginning of the year, the volume of freight shipped by US liner services has declined from the high growth rate seen in 2019. This is because after the impact of the pandemic weakened the supply chain, fiscal stimulus may be reduced, and the inflection point of liner demand should have arrived. 'The congestion at US West Coast ports has improved somewhat, and the number of ships waiting to berth at Los Angeles Port has dropped from its high level in the past three months. As the impact of the US pandemic gradually weakens, it is expected that supply bottlenecks will also be gradually alleviated,' said the above-mentioned shipping industry insider.   Regarding the future market of the container shipping industry, Yue Xin, an analyst in the transportation sector at Guotai Junan Securities, believes that there are uncertainties about the market conditions in the second half of the year. "The impact of overseas epidemics is gradually weakening, and it is expected that the net profit margins of container shipping companies will continue to remain high in the first half of the year. However, there are risks of uncertainty regarding the high prosperity of the industry in the second half."   "On one hand, shipping companies have maintained their previous shipping schedules, but the export of goods from China to Europe and America has significantly decreased, reversing the supply-demand relationship. As a result, popular routes such as West Coast container shipping rates (standard containers) have fallen to around $6500, while the highest price on this route was as high as $20,000, a reduction of about 60% compared to the peak. Therefore, the three major shipping giants have recently started to withdraw ships to prevent a sharp drop in freight rates." The above-mentioned shipping expert added to the Securities Daily reporter.   According to the data disclosed by a listed A-share container shipping company, freight volume shows a downward trend. In the first quarter of 2022, the company's containerized freight volume was 6.1617 million TEUs, a year-on-year decrease of 9.17%, with a fleet capacity of 2.9419 million TEUs.   Regarding the future trend of container shipping, Galaxy Futures stated in their research report that in the short term, China's epidemic has not fully recovered, and with the active resumption of work and production in Southeast Asian countries, China's export demand is being diverted. It is expected that container shipping prices will continue to weaken in the short term. In the medium to long term, against the backdrop of geopolitical conflicts, global inflation and interest rate hikes are expected to suppress commodity demand, making it inevitable for container shipping prices to fall back from high levels.   Freight rates plummeted Shipping giant Asia-Pacific routes voluntarily suspended voyages "3 and 4th months saw immediate freight rates for group shipments continue to decline. Recently, shipping companies have withdrawn their ships, so prices have slightly warmed up a bit, and space has become a bit more scarce. However, overall it is very difficult to return to the state last year when one ship was hard to find. Last year, there were many goods but ships were stuck at foreign ports, forcing a reduction in schedules. This year's situation is just the opposite," revealed an unnamed freight forwarder from Shanghai to the Securities Daily reporter.   Not only is ocean freight falling, but Seaintelligence's latest data shows that the demand for sea container transportation has also declined for the fifth consecutive week.   Facing the continuous decline in freight rates and the continuous reduction in export cargo volume, the container transportation market is 'over-supplied'. In order to maintain high freight rates, international maritime giants have taken measures such as canceling some voyages and increasing empty flights to keep prices stable.   According to public information, the Maritime Alliance is preparing to cancel more than one-third of its Asian routes within the next few weeks. Mediterranean Shipping recently announced that due to persistent challenging market conditions leading to congestion in the entire supply chain and delays in shipping schedules, it will cancel routes from Asia to the US East Coast. Hapag-Lloyd has recently issued a schedule adjustment notice, stating that services on its Asian-to-Mediterranean route, including MD1, MD2, and MD3, will be cancelled for voyages calling at Shanghai Port, Ningbo Port, and Busan Port over the next eight weeks.   Maersk issued a notice on May 10th: The unprecedented severe port congestion globally continues to cause delays on several routes from Asia to the Mediterranean. To provide our customers with better visibility of schedules, after careful review of schedules, Maersk has decided to adjust sailings starting from the following voyages to match the actual number of weeks before departure for ships and services.   Even though the cancellation of ships is inevitable, it cannot stop industry insiders from being bearish on the container market in the second half of the year.   "Since 2022, despite the peak period of the container market, congestion problems still exist at some major overseas ports, which will continue to affect the maritime logistics supply chain and may lead to further declines in freight rates. At the same time, affected by geopolitical situations and the COVID-19 pandemic, the global supply chain continues to face immense pressure, which is expected to continue impacting container freight rates." Xiang Weili added to a reporter from Securities Daily. *This article is reprinted from 'Securities Daily', with reporter Shi Lu. The original title was 'Popular Routes' Freight Rates Drop by Nearly 60% as Shipping Giants Cancel Ships to Protect Their Prices'.

Frost & Sullivan insights On May 10th, the National Development and Reform Commission issued the '14th Five-Year Plan for the Development of the Bioeconomy', which is China's first five-year plan for the bioeconomy and also the first top-level design in the field of bioeconomy. The 'Plan' identifies four key development areas of the bioeconomy: biomedicine, bio-agriculture, biomass alternative applications, national biosafety risk prevention and control, and the construction of governance systems. What is the background for the introduction of this policy? Why was it introduced at this juncture? How should we understand the concept of bioeconomy? What is the current status of bioeconomy in China? Which sectors will benefit from this policy? Mr. Mao Hua, Partner and Managing Director of Frost & Sullivan's Greater China region, was interviewed by 21st Century Business Herald to discuss the development status of the bioeconomy sector in China and the impact that the 'Plan' will have on the sector after its implementation.   21st Century Economic Report "The bioeconomy has always been well-known in the industry and is not a newly emerging concept. The development of some core technologies and related technology applications are gradually forming industrial scale, such as agricultural breeding and super rice. The release of this 'Plan' is an even more proactive approach to facing up to the bioeconomy, but it is also because related industries are still in their initial stages and require further national planning to form an industrial discussion circle." Recently, Dr. Tian Shilin, Chief Scientist at Novogene, analyzed for reporters from 21st Century Business Herald.   The aforementioned plan mentioned is the '14th Five-Year Plan for the Development of the Bioeconomy' (hereinafter referred to as the 'Plan'), which was recently released by the National Development and Reform Commission. This is China's first five-year bioeconomic plan and the first top-level design in the field of bioeconomy. At present, China has achieved great success in the development of the bioeconomy, with the industrial scale continuing to grow rapidly. A complete and functional industrial system has taken initial shape, and a number of bio-industrial clusters have become new engines leading regional development. Important original breakthroughs have been made in basic research in the biofield, and innovation capabilities have been significantly enhanced.   Mao Hua, Partner and Managing Director of Frost & Sullivan Greater China, explained to the 21st Century Economic Report that the bioeconomy refers to the sum total of all economic activities that produce food, energy, biotechnology products, and services through sustainable methods using renewable natural resources. However, there is still a gap in the top-level design and coordinated planning for the development of the bioeconomy. China's bioeconomy faces many challenges, including weak original innovation capabilities, key core technologies being controlled by others, the ongoing evolution of the global pandemic leading to the superposition of traditional biosecurity issues with new ones, relatively weak original capabilities in the biotechnology industry, and an incomplete system for the protection, development, and utilization of biological resources. Wang Xiang, Deputy Director of the High-Tech Department of the National Development and Reform Commission, also pointed out that China's innovative development in bioeconomy still faces many challenges. For example, original innovation capabilities are still relatively weak, with insufficient accumulation of basic life science theories, underlying key common technologies, high-end instruments and reagents, and bioinformatics resources.   The 'Plan' has identified four key development areas for the bioeconomy, namely biomedicine, bio-agriculture, biomass alternative applications, national biosafety risk prevention and control, and the construction of governance systems. It also proposes to strengthen original and leading basic research, emphasize accelerating technological innovation and industrial application, build a national strategic scientific and technological force, improve the mechanism for tackling scientific research challenges, accelerate breakthroughs in development bottlenecks, achieve self-reliance and self-improvement in science and technology, and enhance the security and stability level of the industrial chain and supply chain.   The underlying technology is mature and the industry has achieved scale. In recent years, major countries have increased their support for fields such as life sciences and biomedicine, continuously investing more in areas including genomics, brain and cognitive science, synthetic biology, precision medicine, biomedicine, high-end medical devices, bio-breeding, biomass energy, and biosafety. Especially affected by the COVID-19 pandemic, many national governments and major biopharmaceutical companies, including China, have increased investment in biosafety, vaccine, and drug research and development, objectively driving the bios economy into an accelerated development phase.   In response, Mao Hua pointed out that the bioeconomy will form the next economic growth point in areas such as human health, green agriculture, bioenergy, and biosecurity. The 'Plan' also focuses on selecting four major fields: biomedicine, bio-agriculture, biomass substitution applications, national biosecurity risk prevention and control, and the construction of governance systems. Tian Shilin pointed out to the 21st Century Economic Report reporter that the bioeconomy has formed a certain scale of industries in all the above major fields, and each industry has also developed a variety of mature core products to meet market demand, such as basic scientific research services, vaccine development, new drug research and development, tumor detection, molecular breeding, etc. For example, in the field of agricultural breeding, gene sequencing technology has catalyzed numerous molecular breeding products, completed the mapping of large numbers of economic crop genomes, discovered a large number of genetic molecular markers, and provided extensive resources for precise agricultural molecular breeding.   "Economy involves industries, the large-scale or directional application of certain technologies. For example, based on the discovery of the DNA double helix structure in 1953 and the decoding of the human genome in 2000, with the rapid development of modern biotechnology such as genetic engineering, biotechnology has deeply integrated with information technology, agricultural technology, etc. High-throughput sequencing technology, which has developed rapidly over the past 20 years, has broken through the Moore's Law curve in terms of cost, throughput, and industrial scale. Many talents and resources have been invested in this field, accelerating its formation and creating an economic scale. The development of technology has also brought about a rapid development period for the bioeconomy." Tian Shilin pointed out that the development of technology has gradually formed sub-sectors within industries and led to scaled development. For instance, in the field of gene sequencing, the technology service market serving basic life science research has already formed economies of scale. Jiang Jiang, a researcher at the China Academy of Macroeconomic Research, also gave an example. Ten years ago, the vast majority of pregnant women and patients were still skeptical about the effectiveness of genetic testing for fetal conditions and early detection of cancer; today, millions of consumers are willing to pay for it. Five years ago, people were confused about the utility of nucleic acid testing; today, nucleic acid testing has become the 'gold standard' for diagnosing COVID-19 infection. In addition, more and more non-renewable petrochemical-based products are being replaced by renewable bio-based ones, biomass energy has become an important part of renewable energy, and crops modified using modern biotechnology have seen significant improvements in both yield and quality.   The application of biomass substitution technology has also led to rapid development in related industries. Zhao Yan, Chairman and General Manager of Huaxi Biotechnology, cited hyaluronic acid as an example. Previously, 200 kilograms could produce only 1 kilogram of hyaluronic acid from a rooster's comb. At that time, hyaluronic acid was more than 15 times more expensive than gold; one gram of hyaluronic acid cost $100, while one gram of gold only cost $6. However, now through cell factory production, synthetic biology is not used, and the cost is less than 1% of the original chicken comb extraction method, and this efficiency is not as high as that of synthetic biology. This has also led to a rapid increase in hyaluronic acid production capacity and the continuous expansion of the industry's scale.   It is worth noting that biosecurity is also highlighted in the 'Plan'. 'In line with the new trend of shifting from passive defense to active assurance, we will strengthen the construction of national biosecurity risk prevention and control systems and governance frameworks to meet the people's new expectations for better biosecurity.' In this regard, Tian Shilin pointed out that within the four major areas of biomedicine, bio-agriculture, biomass substitution applications, national biosecurity risk prevention and control systems, and governance frameworks, the construction of these systems is actually aimed at providing assurance for the first three areas.   Strengthen basic research and accelerate transformation Although China's bioeconomy has developed rapidly in recent years, there are still issues such as weak original innovation capabilities and key core technologies being controlled by others.   Wang Xiang also believes that China's innovative development of the bioeconomy still faces many challenges. For example, original innovation capabilities are still relatively weak, with insufficient accumulation in basic life science theories, underlying key common technologies, high-end instruments and reagents, bioinformatics resources, etc. The technology innovation system, which is enterprise-oriented, market-driven, and deeply integrated with industry, academia, and research, is still not perfect. There are also relatively few internationally competitive enterprises, and adverse factors such as the impact of the pandemic on international openness and cooperation exist.   Wang Xuegong, Vice President of the China Pharmaceutical Enterprise Management Association, also pointed out that there are some problems in the field of biopharmaceutical innovation in China. For example, products mainly follow in innovation, R&D is highly homogeneous, and there are gaps between some cutting-edge technologies and international advanced levels. Basic research in life sciences and biotechnology is the driving force behind pharmaceutical innovation. Basic research findings give rise to breakthroughs in new drug discovery. It is crucial for China's biopharmaceutical innovation to focus on the future and be global-oriented, strengthen basic research, and enhance original innovation capabilities.   In this regard, the 'Plan' also proposes to strengthen original and leading basic research. For instance, it aims to target cutting-edge fields such as clinical medicine and health management, new drug development, brain science, synthetic biology, biotechnology breeding, prevention and control of emerging infectious diseases, and biosafety, by implementing major national scientific and technological projects and key research and development programs. It accelerates the creation of a national strategic scientific and technological force in the biological field, actively gathers large teams, resources, projects, and achieves significant breakthroughs.   Jiang Jiang believes that it is necessary to align with the world's cutting-edge scientific and technological advancements in the field of life sciences, increase investment in basic and applied research in life sciences, and continuously promote collaborative R&D among industry, academia, research institutions, and healthcare. Focusing on directions related to the world's scientific and technological frontiers in life sciences, support a number of major scientific and technological infrastructure and innovation platforms. Innovate in the methods of capital investment and operational management models. During the operation of facilities and platforms, introduce various methods and channels for hospitals, enterprises, third-party testing institutions, etc., to participate in testing and feedback. Closely connect with the urgent requirements of implementing the Healthy China strategy, especially addressing the 'bottleneck' issues that constrain the application and promotion of biotechnology, and accelerate the deployment and promotion of a new batch of biotechnological breakthroughs. Xu Ruiming, Director of the Institute of Biophysics at the Chinese Academy of Sciences, pointed out to the 21st Century Economic Report that the development plans of the state, the academy, and the institute all clearly require a deep integration of basic research with national needs. Only by fully supporting the deep integration of industry, academia, research, and application can we fight a tough battle for key core technologies and improve the overall efficiency of the innovation chain. The Chinese Academy of Sciences has many research achievements and basic research, and in the future, it also hopes to better transform these into industry applications.   Jiang Jiang believes that, similar to information technology, the economic attributes of biotechnology are innate, which means that providing biotechnology products and services will be profitable. To return to the economic attributes of biotechnology, it is necessary to start from multiple aspects to ensure that biotechnology enterprises engaged in research and development, production, and service can obtain reasonable economic returns. Whether biotechnology enterprises can accurately grasp market demand, especially in the ultra-large domestic market, is key for innovative enterprises in the bioeconomy field to achieve profitability and sustainable development, as well as for China's biotechnology enterprises to cope with the international scientific and technological innovation environment.   In Tian Shilin's view, the 'Plan' plays a guiding role in the development of the bio-economy. Enterprises gradually form markets through technological advancements, while government documents play a leading and regulatory role in the development of enterprises and markets. At the same time, the introduction of the 'Plan' has also made more people face up to the bio-economy, leading to layered discussions and an atmosphere of horizontal and vertical technological penetration and academic exchange within industries. This is also beneficial for the development of biotechnology companies and is a great boon for technology service companies including Novogene.   RinoGen's scientific research services and products can assist researchers in scientific exploration, providing 'tools' for more scientific research, including basic species genome research, animal and plant development and stress studies, crop and livestock breeding, single-cell omics research, biomarker omics research, and population cohort studies.   Frost & Sullivan Insight & Extended Readings   Q: What is the background for the release of the '14th Five-Year Plan for the Development of the Bioeconomy'? Why was this plan released at this time?   A: During the "14th Five-Year Plan" period, efforts will be made to elevate the total scale of the bioeconomy to a new level, with a significant increase in the number of enterprises with annual operating revenues exceeding 10 billion yuan. Previously, China's "14th Five-Year Plan" and the outline of long-term goals for 2035 also proposed to promote integrated innovation of biotechnology and information technology, accelerate the development of industries such as biomedicine, biological breeding, biomaterials, and bioenergy, and strengthen and expand the bioeconomy. Basic frontier research in life sciences continues to be active, and the wave of biotechnological revolution sweeps across the globe and accelerates its integration into economic and social development, providing new solutions to major challenges such as human life and health, climate change, resource and energy security, and food security. To systematically plan and promote the high-quality development of China's bioeconomy, the National Development and Reform Commission issued the "14th Five-Year Plan for Bioeconomic Development," which is also the first top-level design in the field of China's bioeconomy.   Q: How do you understand the concept of bioeconomy?   A: The bioeconomy refers to the sum total of all economic activities that produce food, energy, biotechnology products, and services through sustainable methods, utilizing renewable natural resources. It encompasses a wide range of fields such as biomedicine, bioagriculture, bio-manufacturing, and bioenvironmental protection. It is a strategic emerging industry with innovative vitality, broad coverage, and profound impact.   The bioeconomy is an economic form characterized by the development and progress of life sciences and biotechnology, based on the protection and utilization of biological resources, and extensively integrating industries such as medicine, health, agriculture, forestry, energy, and environmental protection.   The 'Plan' proposes five principles for the development of the bioeconomy: First, adhere to innovation-driven development; second, promote in a systematic manner; third, pursue win-win cooperation; fourth, benefit the people; and fifth, ensure controllable risks.   Q: What is the current status of the bioeconomy in our country?   A: China has identified scientific and technological innovation and industrial development in related fields of the bioeconomy as strategic priorities, driving significant progress in the bioeconomy. The scale of the bioeconomy's development continues to expand, and the bioindustry system is becoming increasingly complete, forming a complete industrial chain from research and development, manufacturing to application. China has become the world's largest exporter of bulk drugs, the second-largest consumer market for pharmaceuticals and medical devices, and an important exporter of pharmaceutical R&D services.   As one of the countries with the richest biological resources in the world, China has a complete range and system of biotechnology industries, which provides favorable conditions for accelerating the development of the bioeconomy. However, there is still a gap in top-level design and coordinated planning for the development of the bioeconomy. China's bioeconomy faces many challenges, including weak original innovation capabilities, key core technologies being controlled by others, ongoing global pandemics that continue to evolve and lead to the overlapping of traditional and new biosecurity issues, relatively weak original capabilities in the biotechnology industry, an incomplete system for the protection, development, and utilization of biological resources, and a lack of top-level design and coordinated coordination for the development of the bioeconomy.   Q: In which areas will this policy be beneficial for development? What impacts will it have on related industries and enterprises?   A: Areas of positive impact: The Plan clearly identifies meeting the people's new needs for 'medical care', 'food', 'quality of life', and 'security' as key areas for the future development of the bioeconomy. On the other hand, the Plan also specifies accelerating the widespread application of biotechnology to empower industries such as health, agriculture, energy, and environmental protection, promoting the deep integration of biotechnology with information technology, and comprehensively enhancing the diversification level of the bioindustry.   The bioeconomy covered extensively in the Plan includes four key development areas: First, to adapt to the new trend of shifting from 'treating diseases' to 'centering on health', developing biomedicine for people's life and health; second, to conform to the new trend of shifting from 'solving food and clothing needs' to 'nutritional diversification', developing bio-agriculture for agricultural modernization; third, to follow the new trend of shifting from 'pursuing capacity and efficiency' to 'adhering to ecological priority', developing biomass substitution applications for green and low-carbon purposes; fourth, to adapt from 'passive defense' to 'active assurance', strengthening the construction of national biosecurity risk prevention and control systems. Among these, the pharmaceutical industry is crucial to people's life and health and is an important focus for the development of the bioeconomy. It has also played a significant role in the prevention and control of COVID-19 and has received widespread attention.   Impact on the development of related industries and enterprises: The Plan proposes to guide innovation resources towards the concentrated development of Beijing-Tianjin-Hebei region, Yangtze River Delta, and Guangdong-Hong Kong-Macao Greater Bay Area. It aims to cultivate a number of world-class leading enterprises in fields such as biomedicine, bio-agriculture, and bio-manufacturing; support the formation of large pharmaceutical companies with a high degree of internationalization and global layout; and further increase support for biotech companies listing on domestic capital markets.   Q: The 'Plan' has identified four key development areas for the bioeconomy, namely biomedicine, bio-agriculture, biomass alternative applications, and the construction of national biosafety risk prevention and control systems. Why are these areas chosen as priorities?   A: "The bioeconomy" has also been included in the "14th Five-Year Plan" and the "Outline of Long-Range Objectives through the Year 2035." It aims to promote integrated innovation between biotechnology and information technology, accelerate the development of industries such as biomedicine, biological breeding, biomaterials, and bioenergy, and strengthen and expand the bioeconomy. During the "14th Five-Year Plan" period, China's industrial development trend will show four "more prominent" aspects: more emphasis on technological innovation and self-reliance in science and technology, more focus on expanding domestic demand and consumption upgrading, more emphasis on carbon peak and carbon neutrality, and more emphasis on urban agglomerations. Diversified financial resources and social capital will further flow into green bio-industries, generating a trillion-level market prosperity and promoting the development and growth of a new generation of bio-economy. The bioeconomy will form the next economic growth point in areas such as human health, green agriculture, bioenergy, and biosafety. Therefore, priority is given to selecting four major fields: biomedicine, bio-agriculture, biomass substitution applications, national biosafety risk prevention and control, and the construction of governance systems.   *This article is reprinted from '21st Century Economic Report', with the reporter being Zhu Ping. The original article was titled 'The Scaling Up of Mature Technologies at the Bottom Layer: What Are the Shortcomings in China's Bioeconomy?'

Frost & Sullivan insights As of May 10, this year, seven companies including Sany Heavy Industry, Guoxuan High-Tech, Leopu Medical, Shanxiang Co., Ltd., Keda Manufacturing, Fangda Carbon, and Green Energy Materials have planned to issue GDRs and list on the Ruixin Stock Exchange. What are the advantages of issuing GDRs compared to issuing stocks? What is the purpose of domestic enterprises issuing GDRs, and are they suitable for domestic individual investors to participate in? Compared with other national stock exchanges, why has the Swiss Stock Exchange become the preferred destination for most companies? Frost & Sullivan's Executive Director for Greater China, Mr. Wei Li, recently interviewed by Securities Daily to discuss why domestic enterprises are increasingly choosing to issue GDRs on the Swiss Stock Exchange for listing.   Securities Daily On May 10th, Wang Jianjun, Vice Chairman of the China Securities Regulatory Commission (CSRC), pointed out in an interview that the CSRC will introduce more practical measures to expand opening up. Among these, it was mentioned that 'promoting the issuance and listing of interconnectivity depositary receipts by listed companies'.   The reporter found that the process of domestic listed companies going public on the Swiss Stock Exchange (hereinafter referred to as 'Swiss Exchange') with Global Depositary Receipts (GDRs) has accelerated recently, with several companies disclosing their latest progress. On May 10th, Shanxi Antler Co., Ltd. held its annual general meeting of shareholders for 2021 to review multiple proposals regarding the issuance of GDRs and listing on the Swiss Exchange. Prior to this, from May 7th to 9th, three companies including Guoxuan High-Tech, Keda Manufacturing, and Green Energy Materials also disclosed their latest developments regarding the issuance and listing of GDRs.   Since the release of the new interconnection regulations this year, a total of 8 listed companies have announced their plans to issue GDRs and list overseas. Seven of them have set the Hong Kong Stock Exchange as their destination, aiming for a 'zero' breakthrough. Another company has set its target on the London Stock Exchange.   On February 11 this year, the China Securities Regulatory Commission (CSRC) issued the 'Regulatory Provisions on the Interconnection and Connectivity of Depository Receipts between Domestic and Overseas Stock Exchanges', expanding the scope of interconnection and connectivity depositary receipts to Switzerland and Germany. Since then, Switzerland has become a popular listing destination.   According to relevant announcements, as of May 10th, this year, seven companies including Sany Heavy Industry, Guoxuan High-Tech, Lepu Medical, Shanxi Tongguo Co., Ltd., Keda Manufacturing, Fangda Carbon, and Green Energy Materials have planned to issue GDRs and list on the RSE.   In terms of planning the GDR listing process on the Hong Kong Stock Exchange, Keda Manufacturing has made the most progress. On May 9th, Keda Manufacturing issued an announcement disclosing that its GDR application has been accepted by the China Securities Regulatory Commission (CSRC). In addition to the aforementioned Suntech Co., Ltd., the related proposals of Guoxuan High-Tech will also be submitted to the shareholders' meeting for review on May 23rd. The related proposals for the GDRs of Green Motion and Lepu Medical have been approved by the board of directors. Additionally, Sany Heavy Industry and Fangda Carbon also plan to issue and list their GDRs.   The reporter from Securities Daily noticed that Guoxuan High-Tech has disclosed the approximate time for the issuance and listing of GDRs. Guoxuan High-Tech announced on May 7th that "this GDR project is conducive to accelerating the company's international strategic layout, building an international brand and image, and meeting the funding needs for overseas business development. Therefore, the company plans to complete the issuance and listing by the end of July." Based on current circumstances, the listings of Keda Manufacturing and Shan Shan Co., Ltd. are progressing faster, with more than one enterprise completing their listings on the Hong Kong Stock Exchange by the end of July.   "By issuing GDRs to raise overseas funds, enterprises can broaden their financing channels, attract high-quality strategic investors, and also enhance their international profile," said Yan Kaiwen, chief strategy analyst at Huaxin Securities, to the Securities Daily reporter.   "Domestic companies issuing GDRs can improve their corporate governance level and further optimize the shareholder structure." Zhu Zhengqin, head of UBS Investment Banking in China, said in an interview with a reporter from Securities Daily that issuing GDRs allows companies to introduce internationally and domestically renowned investors as shareholders, making equity more diversified, improving the corporate governance mechanism, and stimulating innovation vitality.   According to Zhu Zhengqin, judging from the progress of overseas regulatory initiatives, exchanges such as Germany and Switzerland after the expansion have provided support and actively promoted it. Currently, the Swiss Exchange has taken the lead in implementing rules, which is why companies often choose Switzerland as their listing destination for issuing GDRs. Xiang Wei, Executive Director of Frost & Sullivan Greater China Xiang Weili, Executive Director of Frost & Sullivan Greater China, told the Securities Daily reporter that Switzerland has a long history in financial services. Swiss banks are at the forefront of the world in cross-border private asset management, and the Swiss market is highly open to overseas investors. "The planning of overseas GDR issuance by domestic enterprises is related to the company's own financing needs and market preferences. The RCEA is relatively fair in investor protection and regulation, making it attractive to domestic enterprises," said Fu Rao, executive director of the International New Economy Research Institute.   Frost & Sullivan Insight & Extended Readings   Q: Compared to issuing stocks, what are the advantages of issuing GDRs? What is the purpose of domestic enterprises issuing GDRs, and are they suitable for domestic individual investors to participate in?   A: GDR refers to Global Depository Receipts, which are publicly issued globally and are a type of depositary receipt. Issued by depository institutions, they can be traded in multiple markets and are a financial tool used to raise funds in US dollars or euros. GDR allows companies' stocks to be traded in countries where there is no stock market, thereby enabling investors to invest in the stocks of companies that are not listed on local stock markets. The main purposes for domestic enterprises to issue GDR are: 1. Overseas circulation of shares. By issuing GDR, domestic listed companies can allow the equity rights represented by their stocks to circulate internationally under conditions where the stocks are within the country's borders, expanding financing channels, raising overseas funds, and attracting foreign investors; 2. Enhancing the international visibility of domestic enterprises. For individual investors, the threshold for participating in GDR is usually higher.   Q: Compared to other national stock exchanges, why has the Swiss stock exchange become the preferred destination for most companies?   A: Although the Swiss stock exchange has a smaller trading volume, it benefits from the long history of the Swiss financial industry, its leading position in cross-border private asset management among banks worldwide, and its high openness to overseas investors. On February 11th, the China Securities Regulatory Commission (CSRC) issued the 'Regulatory Provisions on the Interconnection and Connectivity of Depository Receipts between Domestic and Overseas Stock Exchanges', which is an 'upgrade' of the 'Regulatory Provisions on the Interconnection and Connectivity of Depository Receipts between the Shanghai Stock Exchange and the London Stock Exchange (Trial)' and expands the coverage of interconnectivity depositary receipts to Switzerland and Germany, setting a precedent for the market. At the same time, China's financial system is further deepening exchanges and cooperation with the financial systems of the aforementioned countries to promote efficient and mutually beneficial integrated development.   Q: How do you view the regulatory authorities' repeated statements 'accelerating the implementation of new regulations for overseas issuance and listing of enterprises'? What positive impact does this have on promoting overseas listings of enterprises?   A: This represents that the China Securities Regulatory Commission (CSRC) will expedite the research and introduction of a new round of measures, steadily expand the scope of targets for the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect, promote the expansion of the Shanghai-London Stock Connect mechanism, and steadily increase the two-way opening of financial markets. Accelerating the implementation of new regulatory rules for corporate overseas issuance and listing, as well as maintaining smooth channels for overseas listings, will help Chinese enterprises effectively utilize international resources and capital to achieve better development.   *This article is reprinted from the 'Securities Daily' news section, with reporter Xing Meng. The original title was 'Seven listed companies plan to issue GDRs to list on the Ruixin Stock Exchange, with the earliest possible listing before the end of July'.