Foreword

"Industrial hemp Plus" can completely match the "internet plus" proposed by our government ten years ago, and there will be many great enterprises, which will be an upgrade and a revolution to the traditional industry.

In the $100 billion industrial hemp market, capital is in place and explorers are on their way. Space ready, story to be written.

In order to let more people inside and outside the industry know the latest trend of the industrial hemp market, 36Kr and ACU Asia-Pacific industrial hemp Industry Association will jointly hold the first "WISE2020 Leader x 520 industrial hempFestival" industrial hemptheme forum, and hold the first online live industrial hemp summit at 19: 00 on May 8th.

From the latest development direction of the upstream and downstream of the industrial chain, this summit analyzes the consumption trend of industrial hemp products and the wealth of industrial hemp market, and brings all-round professional information and innovation opportunities for enterprises and consumers.

36Kr invited Tan Xin, chairman of HMI Group, to share with practitioners: How to accurately interpret the market trend?

The following is a live online speech by Tan Xin, Chairman of HMI Group:

01 Investment logic: breaking the cocoon investment rule

First of all, I'd like to thank 36Kr and Asia-Pacific Industrial Hemp Industry Association for their invitation, and thank you all for your participation. HMI Group invested in the industrial hemp field earlier and made a lot of efforts. At that time, there were unclear laws and regulations and misunderstanding among the common people and consumers, so many friends were very curious about how HMI Group chose to join the industrial hemp industry. In order to let the friends who attended the meeting today who are interested in the industry or have already joined the industry know more about industrial hemp, I will analyze how HMI Group judged and entered the industry at that time and how we laid out in the industry from the perspective of investment.

Today's topic of my speech is "Moving ahead of the trend, high probability of success". Many friends may be familiar with this topic when they see it. This is the topic of a recent online summit conversation between Mr. Shen Nanpeng of Sequoia Capital and Mr. Su Shimin of Blackstone. This sentence should be said that 100% people can understand it, but 99% people will be at a loss. Why?

The word "trend" itself should be a kind of retrospection of the development of history and affairs to a stage. The literal interpretation given in the dictionary is "adapting to the development trend and the inevitability of historical development", which is also a vague concept. How can we judge the future of "trend" at this stage? It was successful first, but the fact is that many people failed to grasp the trend correctly and became martyrs.

I have read that many similar successful investors have implemented some methodologies, such as Musk. Musk is the greatest innovator in today's society, and he follows the first principles. The core logic of first principles is tracing to the source, and the reason for tracing to the end can only be God's arrangement. When the essence of a thing can be explained with the words of God, it may be traced to the most fundamental source. Through such a four-step logic of tracing to the source, then decomposing, reshaping and iterating, a great world-class innovation has been created. Like Soros, the financial capital tycoon, his philosophy is called the reflection principle. His Financial Alchemy published in 1978 emphasized that the market is not as rational and orderly as textbooks say. The core logic is that people's cognition of the world is imperfect or people can't know the world correctly. By using this theory, he can create more than 30% returns for his investors in the capital market every year.

So, I think HMI Group should also have its own set of investment methodology, which can help us explain this difficult "trend" and predict new industries, new products and new markets, but all new things have the characteristics of cognitive constraints and lagging laws and regulations. We have summarized a set of investment rules that are suitable for HMI Group or our management team. You can search for this rule on Google or Baidu, and you can't find it at all, because it is an original rule-"Breaking Cocoon Investment Rules". I'd like to share it with you here. The word "cocoon" of this rule actually has a corresponding relationship with the cognitive constraints and regulations I mentioned earlier. Only by breaking the constraints can we grasp the trend and finally form a first-Mover advantage in an industry or a new product or a new undertaking.

02 "Breaking Cocoon Investment Law" three elements

There are three elements in the Breaking Cocoon Investment Law, all of which are indispensable. My summary is as follows:

01 The first element: it is in conflict with the current regulations or impossible.

Everyone will say, Mr. Tan, do you have to do something illegal? Actually, this is not the case. From the beginning of civilization, we all know that everything is preceded by actions, followed by rules or regulations. Actions must take place in front, followed by regulations.

For example, in a tribe in primitive society, one person stole another person's prey (food) and ate it, but the workers didn't enjoy the fruits. At this time, after the patriarch discovered this problem, he defined this behavior as "stealing" and formulated a law. Stealing things will be punished and there are laws to follow, which continues to this day. Therefore, "conflict or impossibility with the current laws and regulations" is not to do something illegal, but to look for the opportunity that the law lags behind when there are already actions!

In today's society, nearly one hundred years is a period of rapid development of our society. In this information-based society, science and technology are constantly improving, and we have made many innovations. For example, ten years ago, everyone knew that stem cell industry is a very hot investment direction today, and it was also affected by the policy in the middle. After the Wei Zexi case, the state stopped this industry, because it was a new industry, and the cognition and corresponding norms were not perfect. Finally, the government and consumers recognized that the clinical treatment of stem cells was effective after the norms. Therefore, all new things will conflict with the existing laws and regulations, or there will be no legislation. This is an inevitable trend of development, and it is not that we don't know the law or obey it. This is the first factor for me to judge a new industry.

02 The second element: the application scenario is formed and spread.

Judging from our intelligence and keen eyes, the application scenario of this industry has actually been quietly developing and has formed a trend of gradual spread. We can also give an example. Is it a good project if it conflicts with laws and regulations or has already started to spread? No! A few years ago, P2P, our fast-growing financial industry, should be said to be in line with the two elements of Breaking Cocoon Investment Law, namely, "conflict with existing regulations or inability" and "formation and spread of application scenarios". However, such industries are still very dangerous. In the early stage of a new industry, the government was tolerant, and there was no problem, and the scenarios were formed. All speculators were involved, but as a result, the government stopped relentlessly after discovering the problems, so in Breaking Cocoon.

03 The third element: strong trends are related to life and health.

What is a strong trend? The strong trend must have something to do with our life and health. At our age, if we don't catch up with the real estate and catch the express train on the Internet, we can no longer be absent from the investment direction in the field of "great health", and only the industries related to life and health can't be stopped by policies.

Looking back, the industrial hemp industry is in line with our "Cocoon Breaking Investment Law". With the support of this theory, HMI Group broke the routine and started its national and global distribution six years ago. I believe that the industrial hemp industry will eventually break through the cocoon and become a butterfly, because no organization or government can stop people's pursuit of health, and cannabinoids are really effective for our health. So I think the opportunity has come now, in fact, in the industrial hemp industry.

Just now, Wu Li, deputy director of TF Securities Research Institute, spoke very well. 2019 is the first year of industrial hemp in China. Why is it the first year? There are two important factors in front. American industrial hempin G7 countries is all federally legal, including Canada's all federally legal in 2018. Another important factor is that the smell of capital is the most sensitive in any emerging industry. In January 2019, the share price of an A-share listed company that entered the industrial hemp industry in cooperation with HMI Group doubled several times at that time, which attracted the attention of the capital market. Then China also formed the stock industrial hemp index. In the peak period, there should be 83 listed companies preparing to invest in the industrial hemp industry, with their total assets exceeding 500 billion RMB. Now, some hot companies are gradually withdrawing. At present, there are more than 40 companies in the industrial hemp index, including 11 listed companies, which have maintained cooperation with HMI Group in various fields.

Therefore, driven by the capital market, in 2019, 130 million investors in China learned about industrial cannabis, learned about this industry, and made a very good and in-depth education of this industry. Everyone finally knew that industrial hemp, a "drug" hated by Chinese people, is actually full of treasures. It still has a lot of medicinal development value, and it is a medical treasure that needs to be developed urgently.

03 The Core of Industrial hemp: Application Technology of Cannabinoid

What is the core of industrial hemp industry?

HMI Group is an enterprise with a relatively complete layout in the global industrial chain, and it is also an enterprise that many enterprises are willing to learn and imitate. However, in my opinion, HMI Group should be a relatively "deformed" enterprise, a special enterprise created by the times. Why? Because HMI Group's investment covers the whole industrial chain, it should be technically specialized. If you plant seeds, I will plant them. If you plant them, I will extract them. If you extract them, I will go to scientific research. If you have scientific research, we will make products, followed by sales. . . However, because HMI Group entered this industry earlier at that time, there were basically no companies with synergistic effect, so we had to make a layout of the whole industrial chain from seed, planting, extraction, scientific research, products to sales.

When Yunnan Anti-drug Bureau issued our license for industrial hempProcessing, I remember that the director told me a sentence that impressed me deeply: "General Tan, the license for HMI Group is to allow you to extract non-drug ingredients from drugs and sell them at a" drug "price. Therefore, the industrial hemp industry is still a very strong regulated industry. The red line of our regulatory department is absolutely untouchable. THC is a substance that produces activity on our nerves, so it explains a question of many people. Cannabidiol CBD is not addictive in the end, and it won't be addictive if it doesn't form activity. Again, CBD is not the name of a single compound cannabidiol. In my eyes, CBD is synonymous with cannabinoids, which are effective substances that do not produce psychoactive effects on human nerves.

Here's a new concept. There are two ways to obtain cannabinoids. One is traditional agricultural planting, the process of industrialization of agricultural products is completed by processing and extracting effective substances, and the other is a method to obtain cannabinoids. This method is now popular in international investment. Biosynthetic cannabinoids are the best way for biopharmaceuticals, but for common FMCG products, we still think that extracting cannabinoids from plants is the best choice, and biopharmaceuticals synthesize cannabinoids.

In China, Deyi Bio, a joint venture between Dezhan Healthcare and HMI Group, has been able to synthesize a variety of cannabinoids. Cronos, a Canadian cannabinoid company, has invested in Ginkgo Bioworks, and started to lay out the application technology of cannabinoid synthesis. Cannopy's investment in a biosynthesis cannabinoid company in Germany is also close to the price of 330 million US dollars. In the future, cannabinoid synthesis may be the main direction to obtain cannabinoids, and the steps behind the industrial chain are the same: scientific research, products, sales and sales.

In the industrial hempindustry, the source of output should be seeds or biosynthesis cannabinoids. I often tell you that when you see me, you will see my parents. Why? Because we are all made up of genes, if our parents give us bad genes, no matter whether we study in Stanford or Tsinghua, that is to say, if we are born a little silly, we can't read cleverness wherever we go to study, and there will be no good results. Therefore, if the seed is not good, the seed is the source of the industry and the most important core of this industry. If we only consider the crops, the importance of genes is very, very important.

Just now, Wu Li said that the current industrial hemp seed varieties in China are relatively backward, which is a common phenomenon. At that time, when the industrial policy was unclear, the attention of the research team was not high, the capital injection was not active, and the market awareness was relatively low, Mr. Yang Ming of Yunnan Academy of Agricultural Sciences also worked hard to complete Yunma No.7 and No.8, and Mr. Yang did a lot of work. Now, with the addition of capital, HMI Group and Hemp Research Institute of Chinese Academy of Agricultural Sciences have made a lot of investment. At present, our HMI Group approved a seed which can be compared with the current average level in the United States last year, and its CBD content is about 8%. HMI Group is also cooperating with Kunming Agricultural Investment, the state-owned capital of Yunnan Province, to build Liangwangshan, Kunming City, Yunnan Province, and set up the world's large indoor greenhouse industrial hemp planting base.

Some friends may ask, isn't greenhouse planting very popular abroad? That's for medical marijuana or recreational marijuana, while greenhouse cultivation is carried out in the field of Cannabis. HMI Group is the first person in the world to eat crabs, and it is also to improve production efficiency. It can grow in multiple seasons a year while ensuring organic cultivation. The conclusion is that seed companies or companies that synthesize cannabinoids from the source of industry will produce great companies.

The application technology of cannabinoids, I very much agree with the introduction just made by Deputy Director Wu Li. The application technology of cannabinoids is the core, which is a key link to connect our crops or upstream cannabinoid biosynthesis technology and connect with the market.

As we all know, cannabis covers more than 1,000 kinds of FMCG in 14 industries in application scenarios. It should be one of the largest category of FMCG in the future world, so it has a great application space. Its application technology was first advocated by biopharmaceuticals, the cannabis plant banned as a drug in 1936. Today, more than 80 years later, it is classified as legal all over the world. There is a core logic in this, and it has a very good therapeutic effect on some incurable and unsolvable diseases in modern times. It is mainly related to nerves, such as Alzheimer's disease, Parkinson's disease, epilepsy and depression, which all have very good curative effects.

Bio-pharmacy is also the most advanced application technology, and it takes a long time and process to turn cannabinoids into drugs. Very good news. In 2018, GW Company completed the first FDA approval for children's epilepsy drugs. This year's financial report shows that it has completed sales of 300 million USD, which also encouraged the fighting spirit and confidence of HMI Group and participants.

Among the whole cannabinoid application technologies, HMI Group owns Academician Yang Baofeng's workstation and Hanyi Biopharmaceutical Company. Besides GW Company, HMI Group's invention patents of various cannabinoid application technologies rank second in the world, and research on biopharmaceuticals and underlying technologies is a process that requires long-term continuous investment. However, the greatness of this industrial cannabinoid project is not limited to biopharmaceuticals, but also the application of FMCG. In line with some of our Chinese investors' investment ideas, we can make some FMCG industry layouts with new tobacco as the direction, cosmetics as the direction, food and beverage as the direction, and even industrial hemp fiber as the direction to promote the sustained and stable development of the whole biopharmaceutical industry. Of course, HMI Group still takes biopharmaceuticals as its main development direction,

At present, HMI Group has 15 enterprises in this industrial hemp field, all of which have chosen good partners in different categories, with strong financial strength, excellent technical team and outstanding sales team. The industrial cluster composed of HMI Group promotes the development of the whole industry. HMI Group has also made the corresponding layout overseas. We are fully licensed in the United States, completed the investment cooperation of a listed company in Canada last month, and also got the full license in Canada. The next stop may be Europe. HMI Group has a global layout, and Large market for real application scenarios should still be in China, so the application technology of cannabinoids is one of our most concerned focuses. It ranges from biopharmaceuticals to water-soluble CBD, and Coca-Cola wants to make a drink. Cannabinoids should also be dissolved in water, because cannabidiol CBD is a fat-soluble substance which is insoluble in water, and this application technology has the opportunity to be reflected in its core value.

The Future of Hemp: "The No.1 FMCG Category in the World" Just now, I talked about more than 1,000 FMCG products in 14 industries. I divided them into five major categories, and there are many forms of formats.

Besides biopharmaceuticals, we put new-type tobacco in the first category, because traced cannabis is smoked, and this consumption scene does not need to be educated. Healthy CBD e-cigarettes have begun to be popularized in Europe and America. HMI Group and listed companies have invested and set up a new-type tobacco company to make new-type tobacco that heats but doesn't burn cannabis, which will be exported to the whole world through the industrialization process of agricultural products. Our goal is to make new-type healthy cannabis cigarettes with zero THC pure CBD in the future. Of course, last year, we also know that the parent company of Marlboro, Altria, invested US$ 18 billion in Cronos (a cannabis company in Canada). We can also see and capture some industrial directions and confidence from international investment.

The second is food and drink. Like Coca-Cola, the global wine giant Constellation Group invested in Canopy, a cannabis company, and Red Bull Company of Austria purchased CBD from our group for pre-research of beverages. There are also some food and beverage giants in China who are ready to participate in it, so food and beverage is an important category.

Daily chemicals are the third application direction. Industrial hemp cosmetics have a very good repairing effect on skin, anti-oxidation and anti-aging can make us young, and at the same time, it has a very good oil control effect, and it also has a very good effect on young people's oil-tight alopecia. Even for neurodermatitis or psoriasis skin diseases that we can't treat, CBD has a strong repairing effect. Therefore, cannabinoid, led by CBD, has a strong application and development space in the daily chemical field. In the past year, through channels, we have learned that more than 300 domestic enterprises have applied for trademark or registration of cannabis cosmetics. Why? Because we are allowed to add cannabis leaf extract in the 2015 Chinese cosmetics raw material catalogue, there is no obstacle to its application in the cosmetics field in China.

Finally, there is a non-woven fiber. Just now, we mentioned that hemp fiber has a natural function and has a good application scene in order to understand the decisive battle injuries and skin diseases in the military.

In 2012, more than 2 million soldiers of the Chinese People's Liberation Army had installed industrial hemp fiber uniforms and close-fitting clothes, and used 30% hemp fiber to enhance combat effectiveness and reduce non-combat attrition caused by skin diseases. As a kind of military-to-civilian use in the army, we also made non-woven industrial hemp fiber masks and protective articles, as well as pads, sanitary napkins and absorbent tissues for women during this year's epidemic. Industrial hemp fiber is the Special fiber in the world with natural antibacterial effect, and it can kill 99% of Staphylococcus aureus, Candida albicans, Escherichia coli and other bacteria without adding any other ingredients, which is based on the test report. If you are interested.

The greatest thing is biopharmaceuticals. China is a big country of generic drugs. Strictly speaking, in recent decades, we haven't seen any good drugs. However, this legal wave of industrial hemp has basically kept pace with the whole world, and it hasn't fallen behind. Moreover, in China's Compendium of Materia Medica, hemp (Hemp twist) has been introduced to treat memory decline, which is similar to the current research that shows that it can treat Alzheimer's disease.Industrial hemp has been recognized in Chinese traditional medicine culture for thousands of years, and now we are not behind the world. In this respect, around the development of cannabinoid pharmaceutical products, China will have the opportunity to share this cake with the world pharmaceutical giants.

Of course, this is a new thing, a new thing and a new trend. How can we grasp this trend? With the progress of people's understanding of this and the continuous improvement of policies, I think that "Industrial hemp Plus" can completely match the "internet plus" proposed by our government ten years ago. There will be many great enterprises in the field of industrial hemp subdivision, which will be an upgrade and a revolution for the traditional industry, and it is also an opportunity to use industrial hempto close the distance between China's manufacturing and the world.

Tag

Finally, to sum up today's speech with a sentence from Mr. Ma Yun, "This is an era when you don't have to wake up if you wake up too slowly", so I hope that you can have your own investment rules and methodology to grasp the trend and join in this industry that comes once every few decades. HMI Group is willing to communicate with you more, and we will create and develop this great cause together. Thank you all!