The Danish bio-producer that made it in China

We look at how Novonesis broke into the Chinese market. 

As Western investments back away from China, Denmark’s Novonesis is continuing to build on a three-decade presence there. 

With a biochemicals portfolio that aligns with Chinese development priorities, the company’s future in the local biotech ecosystem seems secure. We look at how Novonesis broke into the Chinese market. 

The global face of Danish biotech

The time for biosolutions is now,” announces the Novonesis website. The Danish company specialises in enzymes, enjoying an almost 50 per cent global market share in this specialist commodity, as well as industrial microorganisms.

Enzymes may be a low-volume product compared to other biomaterials but it is found in almost every industry. Novonesis produces enzymes for use in edible proteins, food ingredients, household care, cleaning, medicine and health, and agricultural inputs. 

The company’s story began in the 1920s when the Pedersen brothers left their employer Nordisk to form a competitor firm Novo Terapeutisk Laboratorium. Nordisk and Novo merged in 1989 into the behemoth Novo Nordisk. In 1989 Novonesis, known as Novozymes until January 2024, split from the company. 

- Advertisement -
Ad imageAd image

As well as being one of the biggest European enzyme producers, Novonesis is a key example of a truly global company, with subsidiaries in countries across Asia, Europe, and the Americas. 

Why China?

As one of the earliest Western biotech firms to set up in China, Novonesis’ presence there is a major part of this success. The company currently holds about 2,200 patents and 800 trademarks in China’s biotech sector and 1000 employees across six sites in the country. Novonesis opened its latest office in China just in October 2024 in Guangzhou, an exceptional mark of confidence in the market. 

Novozymes, as it was then known, had a presence in Beijing since the early 1990s. It was only in 1997 that it finally established a Chinese subsidiary. From there, the company rode the coattails of the country’s economic boom, one that reshaped global trade over the next decade. 

Novozymes early on also saw China’s potential as a booming consumer market for renewables products just as growth, urbanisation, and industrialisation were accelerating there. 

“We have developed together with China’s opening-up,” said Graziela Chaluppe dos Santos Malucelli, a senior vice president at Novozymes in 2018.

The company also selected China for its large and under-utilised biomass resource pool. 

Despite intensive urbanisation since then, China still has a huge agricultural and forestry sector and its byproducts from these sectors are among the biggest in the world. 

In the late 2000s, Novonesis expanded its presence in the country by participating in collaborative projects with local firms. 

Novonesis initially saw great potential in China’s cellulosic biofuels market.  In the late 2000s, it linked up with China Resources Alcohol Corporation to collaborate on R&D.

- Advertisement -
Ad imageAd image

This state-owned company offered Novonesis benefits such as its connections with research centres around the country. A key benefit of breaking into the Chinese biochemicals ecosystem was access to a strong pool of highly trained scientists at a lower cost than in Europe. 

Partnering with local firms remains part of the company’s strategic blueprint for other emerging markets along the biofuels and biochemicals supply chain such as Brazil and India.

Meeting China’s needs

Novonesis basic business mission in China remains effectively the same as it did when it started there: to develop ways of turning low-value local agricultural waste into high value materials using proprietary processes. 

Novoensis’ strategy in China from the start has been to finely tune its product range to local market needs – in short, this means serving the development priorities of the Chinese government. 

An overarching preoccupation in the Chinese Communist Party almost since its founding has been resource security and reducing import dependence for key goods. Novonesis slots neatly into the Chinese government’s continued push to maximise domestic resources. A large biochemicals industry can mop up huge amounts of agricultural byproduct, displacing the need for costly imports in oil or other raw materials. 

The biochemicals producer is shaping up to play a key role within the Chinese government’s new economic development strategy centering around ‘high quality industry’. If China made its name as the factory of the world for cheap goods in the 2000s, it now wants to build out more advanced manufacturing capabilities focused on higher-value industries: among them, biotech and biomanufacturing. 

Apart from China’s ambition to dominate in emerging industries such as biotech, Novonesis products are also attractive for a state now aiming to ease its dependence on food imports.

Novonesis launched its feed enzymes range Ronozyme in China in 2021, showcasing it at the China International Import Expo. China’s livestock sector is currently looking for ways to cut imports in soybeans for animal feed. If company claims for the product are to be believed, Ronozymes could cut feed demand by improving metabolic efficiency in livestock.

The growth of the biobased industry could also meet another policy concern in China – industrial pollution. China’s momentous growth over the last two decades has taken a toll on the environment. Waste is now posing huge concerns for public health. 

Novonesis has already offered microbial wastewater treatment solutions in factories in Ningxia, Shanxi, Xinjiang and Inner Mongolia to meet both wastewater compliance laws and increasing water availability in the region. 

First mover advantage

Novonesis’ longstanding presence in China gives it an advantage now as the business world navigates new geopolitical tensions and competitive rivalries. 

After the pandemic, some European chemicals companies have started investing in modern plants in China as rising production costs in their home region push them out. With a solid presence over three decades and its now-close ties to the Chinese government, Novonesis has an advantage over these newcomers. 

Yet for certain Western chemicals producers, Novonesis’ experience in Chinese industry could give them a leg-up in the new market. Novonesis produces PET-recycling enzymes for Carbios, a French biochemicals company. Their partnership could facilitate a possible tie-up between Carbios and Zhink Group to roll out a biobased recycling plant for PET waste in China.

Over the decades, Novonesis has cultivated an effective working relationship with the Chinese government. This relationship has mutual benefits, with Novonesis now a poster-child for the Chinese government as it attempts to show the world it offers a level playing field for foreign businesses that choose to operate there. 

In 2017, China’s Supreme People’s Court ruled in favour of Novonesis and against Chinese rivals accused of infringing one of its enzyme patents. As well as being a landmark ruling for the firm it was a win for the Chinese government too, keen to show its intellectual property laws are upheld impartially, even for the Western innovators.

Nonetheless, compared to the US and Europe, Chinese law still has weaker protection for some biotech patents. Intellectual property is an area Novonesis has tactfully prodded the central government to improve, stating recently that it remains ‘optimistic’ its protection standards will fall in line with other major markets.

Novonesis has taken a diplomatic approach to the Chinese government on IP as it pushes to become a leading partner in delivering ‘high-quality industry’ for the state. For a Western firm, this approach has given it a position of relative influence within the country. In 2024 CEO Ester Baiget said that the company was collaborating with the Chinese Communist Party (CCP) to eliminate regulatory bottlenecks to achieve growth in domestic green transition industries. 

Today

Novonesis’ early expansion in China was reflective of the early 2000s global moment: China had opened its doors to growth, investment, and trade. Western governments and companies were keen to seize the opportunities. 

Back in 2023, Novonesis president Michael Christensen emphasised the importance of pursuing ties between the business and political communities, urging EU-Chinese cooperation on biofuels. 

Now, with geopolitical tensions between China and the West rising, Christensen’s messaging sounds like one from a bygone era. Companies are moving supply chains out of the country to avoid regulatory backlash from the EU and US. 

Yet for Novonesis, a changed global landscape only presents new opportunities. In China, Novonesis is cooperating with the government on resource security, growth through high-value industries, and environmental clean-up. Over in Europe, meanwhile, it is presenting biobased production as a way of derisking from China. Its CEO recently made her case to Brussels:

‘For every job you’re creating in biosolutions, four more jobs are created in the value chain.And those are local jobs. It’s jobs in agriculture, in production. They are jobs that allow you to deleverage. You won’t need chips from China. It’s biofermentation and feedstocks produced and used locally.’

With a firm foothold in both European and Chinese markets, Novonesis is confidently tailoring its business pitches to the policy ambitions of two rival regions, a sign of its skill in navigating a more fractured world. 

Share This Article