We place significant emphasis on research and development. In order for us to stay competitive in our industry, and due to market demand for a wider variety of products, we set up the Luzhou Biotechnology Research and Development Centre in September 2000 to engage in research and development of new quality products and skills and technology in production methods. Our research and development focuses on developing varieties of products with desired characteristics, and on improving our production processes, as well as the quality of our existing products. We rely on market research and feedback from our customers and peers in the industry as the basis for our research and development. In recognition of our research and development capabilities in our Luzhou Biotechnology Research and Development Centre, in March 2003, we were recognised as "???????????" (The Centre of Enterprise Technology Recognised by Shandong Province) by the Shandong Economic & Trade Commission, thereby enabling us to reap certain benefits such as tax exemptions on the import of certain equipment and facilities.
In addition, CFIA established a "中国发酵工业协会淀粉糖浆质量检测中心" (CFIA Starch Sugar Quality Test Centre) in November 2004 at our research and development centre premises that gives us the authority to conduct quality checks and issue quality reports or certificates that are recognised in the PRC, when requested by third parties to verify and certify the quality standards of their various kinds of sweeteners or other related products.
As at the Latest Practicable Date, our research and development team consisted of 40 staff engaged in full time research assisted by 52 staff who are involved in the supervision and conduct of experiments on product samples drawn from different stages in the production process. Each of our research and development staff who are engaged in full time research holds at least a diploma. Our research and development division is headed by our Executive Director, Wang De You.
We possess sophisticated and advanced equipment to boost our research and development capabilities. Combining various sophisticated equipment, we developed a sweetener simulation production line that is capable of producing various kinds of sweeteners for research and development purposes. In addition, we also possess other advanced production lines and precision equipment to enhance our research and development. This ensures that the products that are developed by us are of the highest quality.
In addition, we entered into a long-term research and development collaboration agreement with Jiangnan University. In our collaboration agreement with Jiangnan University, we agreed to pay a fixed fee annually to cover the relevant expenses incurred in utilising their laboratories, training our research and development staff, consultation relating to our joint research, and reimbursements for materials used in our research and development activities. We have the priority to make use of the successful outcomes from our joint efforts without fee. Such outcomes will be jointly owned by Jiangnan University and ourselves, and neither party may dispose of its rights in the successful outcome without the consent of the other party. We also have an informal collaboration arrangement with Shandong Academy of Science, China-Japan Friendship Biotechnology Research Centre, where they will provide us with the latest updates on corn bioproducts including sweeteners, technological know-how and development of new products in both local and international markets.
In addition to these collaborations, we also tap on external expertise by appointing specialists from the PRC and overseas (such as Japan and Germany) as our consultants to impart their knowledge and skills to improve our product variety and quality, and our production processes.
Three of our products developed through our research and development efforts, namely corn meal fibre, nutritious maltose syrup for beer and maltodextrin for milk powder have attained the "New Product New Technology" Certification (????????????) awarded by Shandong Economic and Trade Committee. This certification recognises the quality of our new products and processing technology developed through our research and development projects and our efforts in meeting the PRC standards. Even though our new products can be sold without attaining such certifications, by gaining these certifications, we can give our customers greater assurance of and confidence in the safety and quality of our new products, hence giving us a competitive edge over our competitors. The following products have attained the "New Product New Technology" certification:-
In addition to the aforesaid certifications of our products, the following were also awarded with certifications from the relevant government authorities in recognition of the advanced technology used in our research and development and production process:-
The Science and Technology Result Identification certification is an indication of the technological advancements in the methods used in the research and development and production of our products. It also recognises that our production methods are reliable and have the potential of being used commercially in the future. Hence, the certification serves to boost our reputation and competitiveness in our industry.
We are currently conducting research and development in the following areas:-
Barring unforeseen circumstances, we foresee that our products currently under research and development will gain customer acceptance if launched successfully. In FY2002, FY2003, FY2004 and FP2005, our investment on research and development facilities and expenses on research and development amounted to approximately RMB 1.6 million, RMB 4.2 million, RMB 6.1 million and RMB 1.4 million respectively.