Hainan's 'fragrant valley' has sweet smell of success

Editor's note: In a series of reports titled "Claims to Fame", China Daily looks at how some regions have earned wealth and recognition through specific products to realize the goal of rural vitalization.

South China's Hainan province is renowned for its beaches and stunning blue seas, but there is also a lesser-known green resource produced on the island offering rich rewards.

Tunchang county, situated in hilly terrain in the middle of the tropical island, is home to 1,307 sprawling hectares of Aquilaria trees that produce lucrative agarwood.

Agarwood, a resin-dense wood known for its aromatic and medicinal properties, has significant cultural and economic value for Tunchang.

In recent decades, the agarwood industry in Tunchang has flourished through targeted planning, development, and cooperation between officials, farmers, researchers, agricultural experts and enterprises.

On Nov 29, the trademark for geographical indication certification of Hainan agarwood was unveiled at a ceremony in Tunchang. A local office to streamline the processing of certification applications was also opened.

"Compared with the domestic market, the agarwood industry in Tunchang is still in its early stages and has yet to achieve a large scale," said Li Fangying, deputy director of the county's development and reform commission.

"To address this, we are employing a strategy of attracting the best by drawing targeted investments, fostering a thriving ecosystem around agarwood, and stimulating industrial growth."

Billion-yuan ambition

Growing and processing agarwood is a time-consuming and intricate process, but it offers great financial rewards.

In Tunchang, the average price of high-quality agarwood, produced from trees that have undergone three years of artificial physical resin production, is around 8,000 yuan ($1,100) per kilogram, according to the county government.

Agarwood cultivation in Tunchang dates back to the late 1950s, but it was not until 2004 that local farmers recognized its commercial value and started the production of artificial agarwood.

The agarwood planted in the county is the native Aquilaria sinensis species, and the process of planting and harvesting agarwood is relatively lengthy, taking eight to 10 years.

However, in recent years some companies have developed agarwood production methods, such as bio-micro invasive technology and saw-cut and inoculation technology, to improve the efficiency of agarwood resin extraction.

"Thanks to the introduction of these resin production technologies, the time required to harvest agarwood resin is shortened to around three years, while they have also significantly increased the purity of the extracted resin," said local farmer Tang Dianjin.

The county has 20 planting companies and cooperatives, including two large-scale ones, already in operation.

In the long term, Tunchang is aiming to develop a billion-yuan agarwood industry and establish itself as a nationally renowned "fragrant valley" by 2030.

An additional 800 hectares of Aquilaria plantations are planned by 2026, taking the total area in the county to over 2,053 hectares. The expansion aims to stabilize annual agarwood resin production over an area of 66.7 hectares, resulting in a projected resin output of 50 metric tons worth more than 300 million yuan.

By 2030, the county plans to increase the planting area of high-quality agarwood trees by 133 hectares and become the largest agarwood production region in the province with 2,587 hectares, said the Tunchang county government office.

Twenty-six villages have so far benefited from 26.17 million in rural vitalization funds to develop agarwood industries, said Wu Hua, a senior engineer with the Tunchang county agarwood industry working group.

Cultivating success

With over three decades' experience in planting agarwood, Hainan Minghe Agarwood Industrial Co is a pioneer in the local industry. Cultivating Hainan native Aquilaria sinensis trees on 333 hectares, it has built the largest production capacity in the county.

The company has launched a series of popular products, including agarwood incense sticks, bracelets, essential oils, moxibustion sticks, tea, and agarwood-infused alcohol.

"Our turnover in 2022 exceeded 26 million yuan, and last year, we reached over 70 million yuan," said Hu Yanming, president of the company.

"We are excited about the prospect of creating even greater value this year," Hu said.

With the support of local village committees, the corporation has forged business partnerships with over 200 farmers.

Unlike other tropical crops, agarwood is a plant that typically requires three to six years to mature, so ensuring a stable income for farmers cultivating agarwood has been a top concern.

Hu said his company introduced the "two free and two allocation" model in 2018 to help farmers. Under the model, farmers are exempt from paying for plant seedlings and resin production costs. Once a contract is signed, the company allocates funds to the farmers twice, providing them with peace of mind and a reliable source of income, he said.

"This model not only supports the cultivation of agarwood, but also fosters a sustainable and mutually beneficial partnership between the corporation and the farmers," said Wu from Tunchang county government.

A cluster of leading enterprises specializing in agarwood planting, processing, and trading, is also being nurtured by the county government.

An international trade center will also be established to facilitate global trade in agarwood products.

In addition, Tunchang county is looking to create agarwood-themed health tourism spots, museums, and towns, that offer visitors an immersive experience tied to agarwood heritage.

Other measures to boost the industry include the establishment of a logistics center and modern distribution facilities to aid the transportation of agarwood, said Li from the county's development commission.

High-tech help

Aquilaria trees undergo a natural process of agarwood resin formation due to environmental "stress factors", including insect bites, animal grazing, wind, rain, and lightning strikes, and bacterial erosion.

Agarwood resin production typically involves two main methods — traditional natural practices and artificial induction via bio-inoculants and chemical inducers.

To stimulate the harvest of agarwood resins, many farmers often resort to mimicking the natural process of agarwood formation by deliberately exposing the inner parts of trees to pathogens and insect infestations. This is typically accomplished through physical stress to the trees, such as making incisions, digging holes, or creating wounds using tools like nails, axes, or screws.

These practices, however, can potentially harm the overall growth and health of agarwood trees.

Recognizing this risk, researcher Yang Yun and his team at the Hainan Branch Institute of Medical Plant Development of the Chinese Academy of Medical Sciences, developed groundbreaking technology that involves the infusion of bio-inoculants directly into the trunk of agarwood trees.

"This innovative approach has effectively addressed long-standing challenges in agarwood resin production, providing a more controlled and efficient means to obtain this valuable resource," Hu, from Hainan Minghe Agarwood, said.

With more than a decade of research and study, Hainan Haixiangyuan Investment Co, is another trailblazer in the county dedicated to agarwood cultivation.

The company has made strides in preserving high-quality agarwood varieties on the verge of extinction in Hainan.

"We have invested more than 10 million yuan in the breeding of 2.6 million Hainan native Aquilaria sinensis trees," said company chairman Wang Haixiang, who moved from Beijing to Tunchang in 2013.

"Our vision is to leverage advanced breeding and resin production technology to cultivate the best agarwood with exceptional medical value, thereby empowering Tunchang county to establish a distinctive edge in the agarwood industry, and supporting local farmers in reaping the benefits of cultivating this valuable resource."

Haixiangyuan has achieved success by overcoming technical challenges associated with tree decay, which has helped unlock the secrets of producing the finest quality agarwood.

The corporation also produces agarwood products tailored for women and has collaborated with the Macao International Agarwood Culture Promotion Association to develop pharmacological uses for agarwood, with the intention of distributing them in markets in Europe, the United States, the Middle East, Japan, and South Korea.

Creating brand image

Launched last year, the Miss Chen label aims to carve out a distinctive identity and boost the reputation of Hainan agarwood both domestically and on the global stage.

A sub-brand of Hainan Minghe Agarwood Industrial Co, Miss Chen is backed by a team of young marketing talent, comprised of overseas returnees and experienced professionals. The brand's mission is to offer the younger generation their first encounter with the essence of Hainan agarwood, the company said.

Miss Chen products, including essential oils and fragrant powders, are sold in major Chinese cities, and its signature moxibustion sticks and essential oils are popular in Europe and the Middle East, according to Song Chun, 36, founder of Miss Chen International Co.

The brand is deeply rooted in the heritage of Hainan's agarwood culture, he said.

"Our guiding principle is the fusion of this rich cultural legacy with contemporary fashion concepts, driving our inspiration for product innovation," said Song.

"We pride ourselves on fostering an environment of innovation within our team, with a keen focus on our target audience and the creative evolution of Hainan agarwood."

Miss Chen's business strategy involves the sale of products through online e-commerce and offline stores. The brand leverages the power of short videos, product showcases, and other formats.

Song said he wants to ensure the integrity of the product through "standardized raw material coding", an initiative designed to uphold the transparency of origin, raw materials, and the year of production. "Our ultimate goal is to establish a standardized production process and a scientifically traceable product system, thereby ensuring the utmost quality and authenticity," he said.

Hu, Hainan Minghe Agarwood's president, said, "Only with robust production capacity, solid traceability, and a testing system, can Tunchang agarwood establish a competitive local brand, so as to increase the added value of its products."

Although the scale of planting, product formats, business models and industrial agglomeration in Tunchang still need to be improved, Hu believes that the county's agarwood industry is on the path to sustained success.

The county has natural advantages in its hilly terrain, the right climate and soil, and being shielded from the impact of typhoons, "which further ensures the stable and steady growth of these valuable tropical trees," Hu said.

But for Hu, in his 60s, agarwood planting is not just a means of making a living, but a passion and pursuit to help others.

"It has become an integral part of my life, shaping my identity and purpose.

"My aspiration is for the agarwood industry in my home county to thrive, extending the reach of agarwood into the lives of more people and bringing prosperity to local farmers," he said.