Entrepreneurship

In 2024, the global termite control market was approximately $43 billion, with the United States accounting for about $24 billion and China around $14.2 billion.

The global termite control market is in a stage of steady growth, while China's termite market is in a new and rapidly developing phase. Compared with mature European and American markets (with a market penetration rate of over 70%), China's market penetration rate is only 42%, indicating significant room for improvement. In China, the biological termite control industry where the project is located has the most optimistic development prospects: In 2024, the termite control market in Guangdong Province was approximately $3 billion, compared to only $0.494 million in 2018, representing a compound annual growth rate (CAGR) of approximately 50.12%.

On the supply side

China's termite control market is still in its infancy. The industry is neither saturated nor monopolized. Chemical pesticides, which dominate the market, are being replaced by biological agents. Detection equipment is becoming more intelligent, and it can be foreseen that the industry has broad development space.

There are only 2,300 termite pesticide production enterprises in China with pesticide registration certificates, less than 1,000 of them have independent R & D capabilities.

The industry's CR5 concentration is 28.6%.。

Due to factors such as environmental protection, the market share of chemical pesticides, which dominate the market, is constantly decreasing.*

Green and professional biological agents are growing significantly and enter the commercialization stage. In 2024, the sales of biological termite pesticides increased by 23.5% annually.**

A total of 2.87 million intelligent detection terminals have been deployed nationwide, and the data return frequency has been shortened from 24 hours to real-time transmission.***

1. ^*For example, pyrethroid pesticides, which account for 68% of market, saw a 7% year-on-year decline in sales in 2024 due to the "New Pollutant Control Plan”.
2. ^**For example, The comprehensive cost of microbial agents (such as Metarhizium anisopliae) is 37% lower than chemical pesticides, and their application proportion in Zhejiang has increased from 18% to 42%. Besides, the gene-edited strain MG342 of the Chinese Academy of Sciences has achieved an 85% nest eradication rate in the Guangdong demonstration area.
3. ^***For example, The AI intelligent recognition model developed by Alibaba Cloud has increased the accuracy of termite damage early warning to 91% and improved the efficiency of pesticide use by 35%.

On the demand side

Influenced by factors such as China's urbanization process, policy environment, and the rise of new market segments, the demand for the termite control market in China is growing rapidly.

In 2024, the area of termite prevention for newly built houses nationwide reached 3.26 billion square meters, a CAGR of 7.3%, contributing 35% of the industry's revenue growth.

"Measures for the Management of Urban Housing Termite Control" plans to extend the preventive warranty period from 15 years to 20 years, the new market capacity will increase by 28%.

The "14th Five-Year Plan for National Termite Control" clearly requires the annual increase of special subsidy funds from the Ministry of Finance to reach 12%.

Zhejiang and Jiangsu have piloted the inclusion of termite control in the mandatory quality inspection catalog for newly built residential buildings.

Building control has the highest market share of 74%, the ancient architecture protection (12%) has the fastest CAGR of 15.2%, and the CAGR of municipal engineering (9%), agriculture and forestry (3%), and water conservancy projects (2%) are 12.5%, 9.3%, and 11.7% respectively.*

^*The protection of ancient buildings will generate new demands for professional control services, and the CAGR of the relevant market size is expected to reach 20%.

Under the trend of consumption upgrading, the high-end home control service market is rising rapidly. In 2024, the number of orders for whole-house control services with a unit price exceeding 5,000 yuan per household increased by 41%.

In addition, the demand in agricultural and forestry fields is increasing, especially in the economic forest planting areas, where the investment in termite control is increasing by 18% annually.

On the channel side

The industry shows a diversified development trend, with the integration of online and offline and the innovation of service models becoming the development direction.

Online professional control service platforms are rising rapidly, B2C model accounts for 28% of market share and is expected to more than 40% in 2026.

The proportion of the C-end home-use market increased to 29%, prompting enterprises to develop small-package product lines with a gross profit margin of over 55%.

The annualized rate of return of government-purchased projects with a term of more than 5 years reaches 9.8%, significantly higher than the industry average of 6.2% for pesticide sales.

The "14th Five-Year Plan for National Termite Control" clearly requires the annual increase of special subsidy funds from the Ministry of Finance to reach 12%.

(1) Geographic Factors: The suitable temperature range for termite activities is 11.1-39.5°C, and the minimum survival temperature is 7.2±2.1°C. Termites are mainly distributed in temperate and subtropical regions, so the termite market has a strong correlation with latitude. Data from the Ministry of Housing and Urban-Rural Development shows that the termite-affected areas in China have covered 18 provinces south of the Yangtze River. Among them, the termite-damage rate in urban buildings in Guangdong, Fujian, and Zhejiang provinces reaches 42%, far exceeding the average level of 28% and contributing more than 60% of the market demand. Frequent termite disasters lead to high demand for prevention and control. In areas where termite disasters are not concentrated and occur less frequently, the service coverage cost is relatively high, and the market is more dependent on self-service products.

(2) Service Scenario Factors: Considering the nature of product use, the product is more likely to establish a competitive advantage in the service scenarios of building prevention and control,

ancient building protection

, and forestry sub-markets. Among them, the product is highly compatible with the prevention and control market of individual-owned existing houses. Building prevention and control occupies the main share of the market and is growing steadily. The capacity of this sub-market can ensure that enterprises obtain sufficient economic benefits. Most ancient buildings have a wooden structure and require non-destructive prevention and control technologies, which is in line with the advantages of our products. Influenced by factors such as policy dividends, technological breakthroughs, and the development of cultural and tourism, the ancient building protection market is developing the fastest. The forest area provides two service scenarios of tree protection and soil prevention and control targeted by the product, maximizing the advantages of the product.

(3) Demographic Factors: People of different ages and income levels have different degrees of attention and consumption habits to termite prevention control. The elderly are more inclined to seek prevention and control services through traditional offline channels, are more sensitive to prices, and pay more attention to cost-effectiveness. Young people, on the other hand, are more dependent on online platforms to understand services and have a higher acceptance of emerging technologies. High-income groups pay more attention to the quality of the living environment and are willing to pay high fees for customized prevention and control solutions, promoting the development of high-end prevention and control services. Middle-and low-income groups may give priority to low-cost solutions (such as bulk pesticides). In addition, families with infants or pets are more concerned about the safety of prevention and control pesticides. The service strategy should focus on non-toxic prevention and control technologies and provide commitments for the safety of children and pets.

(4) Own Resource Factors: According to Article 21 of the Law of the People's Republic of China on the Protection of Cultural Relics, the repair, relocation, and reconstruction of cultural relics protection units must be undertaken by units that have obtained the qualification certificatations for cultural relics protection projects, and there is a large demand for capital advance. Therefore, in the initial stage of development of enterprises that have not obtained relevant qualifications, the target market should be set as building prevention and control and forestry first. The individual-owned market in building prevention and control does not require large-scale fixed- asset investment, mostly relies on small-batch pesticides, has a flexible service mode that can be adjusted according to needs, and has low operating costs and entry barriers, enabling rapid accumulation of cash flow. Forestry is greatly affected by geography and climate, making it suitable for regional small enterprises to provide local services.

In conclusion, during the start-up period, we will target the prevention and control of individual-owned existing houses and forestry in neighboring provinces. After obtaining the qualification for ancient building protection, we will expand into this market.

(1) Chemical Control (taking pyrethroid insecticides as an example):

Widely used in pest control, it has many disadvantages such as poor stability, high toxicity (especially to children and non-target organisms), weak targeting effect on termites, high residue risk, high cost (difficult purification, expensive raw materials), resistance problems, and not conforming to the trend of

Market size: Pyrethroid insecticides are widely used in termite control. In recent years, they have accounted for 25% of the total global insecticide usage and ranked second in the global insecticide market.

Principle: Pyrethroids act on the voltage-gated sodium ion channels on the axons of insect nerve cells, causing the sodium channels to be fixed open, allowing Na⁺ to continuously flow in. Insects show continuous excitement and uncoordinated movement, and ultimately become paralyzed and die.

"high-efficiency, low-toxicity, and low-residue", thus its competitiveness is limited.

Pyrethroid insecticide	Exterminatrix
Unstable in an alkaline environment, at high temperatures (>35°C), or under strong light. Frequent application is required to maintain the efficacy, increasing costs and the risk of residues.	Hydroquinone has good water solubility, heat resistance, and a long action time (it can be reactivated when it comes into contact with water after drying).
Multiple stereoisomers* cost high to separate, causing waste of resources**, toxicity risks*** and pollution accumulation risks****.	By optimizing plasmid, the expression of EcTI can be regulated precisely. Addition of ligand makes it no toxic to eukaryote. EcTI is easy to be degraded by environmental protease.
Long-term exposure to this pesticide during the mother's pregnancy or the early stage of a child's growth is particularly immune-toxic, neurotoxic, growth-toxic, and metabolically toxic to children.*****	Addition of ligand increases target specificity to protozoa and efficiency of lytic peptides, so it is no toxic to eukaryote. EcTI has no significant toxicity to non-target organisms.

1. ^*The main body and side chain structures are complex, often with chiral centers. In some molecules, the side chain contains carbon-carbon double bonds, resulting in cis-trans isomers.
2. ^**The main body and side chain structures are complex, often with chiral centers. In some molecules, the side chain contains carbon-carbon double bonds, resulting in cis-trans isomers.
3. ^***Some isomers have higher acute toxicity, chronic toxicity, or teratogenicity on the reproduction, immune and nervous systems of mammals, as well as on aquatic animals.
4. ^****Non-active isomers are usually more difficult to be degraded by microorganisms due to their stable structures, increasing the risk of pollution to soil, groundwater, or the food chain.
5. ^*****Maternal exposure to pyrethroids at environmental doses during pregnancy or children's exposure during childhood is a key factor contributing to autism, low cognitive ability, and low intelligence levels in children.

There is potential correlation between pyrethroid insecticides and children's susceptibility to ADHD and attention-deficit disorders, and they may have negative effects on children's language expression, social skills, and social emotions. As pesticides with estrogenic and anti-androgenic effects, it can also affect the timing of children's pubertal development by regulating the secretion of gonadotropins through an increase in the GnRH pulse frequency in the hypothalamus. In addition, pyrethroids have a delaying and inhibitory effect on the growth and development of animal physique, showing certain teratogenic effects, by altering gene expression and inducing chromosomal aberrations. The immune surveillance function of children's bodies may be damaged, allowing tumor cells to escape the surveillance and clearance of the immune system and leading to tumorigenesis. The latest research by Skolarczyk et al. also shows that pyrethroid compounds can inhibit the proliferation of white blood cells and reduce the concentration of IgG immunoglobulin [14].

(2) Biological control (taking RNA insecticides as an example):

RNA insecticides function through the RNA interference pathway. They have advantages such as a wide range of targets and being green and pollution-free.

In termite control, they can reduce the anti-fungal activity of termites by silencing specific genes. When combined with pathogenic fungi, they can increase the mortality rate. However, they have limitations such as relying on fungi, slow onset, and weak anti-interference ability.

There are two main applications of RNAi in pest control:

1. Plant-derived protectants. The dsRNA/miRNA with insecticidal activity is transferred into plants through transgenic methods for pest control.

2. Non-plant-derived protectants. Prepare dsRNA/miRNA preparations and use methods such as spraying, root irrigation, or seed soaking for pest control. Among them, miRNA non-plant-derived protectants have been studied in the field of termite control.^*

^*Using miR-715-p for immune response and redox reaction can significantly increase the mortality rate of termites infected by fungi.

The immune response includes AMPs mediated by humoral immunity, as well as phagocytosis and encapsulation mediated by cellular immunity. These immune responses can inhibit the replication and spread of pathogens in the insect body cavity. The redox reaction can reduce the damage caused by toxins and ROS during pathogen infection, helping to improve the tolerance of insects. Induced silencing of genes such as cecropia, GNBP2, selenium-binding protein, and TG has been proven to significantly reduce the anti-fungal activity of termites.

Dicer-1 gene silencing leads to a decrease in miRNA concentration, and the expression of 8 genes related to glycolysis and TCA is significantly down-regulated, indicating a significant inhibition of the whole-body carbohydrate and energy metabolism of termites. The abnormal expression of cytochrome P450 9e2 and peroxidase-4 genes reflects that the redox reaction in termites is affected.[15]

Comparison with Exterminatrix:

RNAi has a good control effect when combined with termite pathogenic fungi, but has a poor control effect in an environment with low fungal load or weak pathogenicity (Dicer-1 will increase the expression of antibacterial peptide genes and needs to be combined with termite pathogenic fungi for control); the onset speed is restricted by the fungal infection process and it is difficult to meet the demand for rapid control; it has a high dependence on the fungal-termite interaction relationship and weak anti-interference ability. Unlike RNAi that relies on termite-pathogenic fungi, our product does not depend on conditions and can adjust to most of environments.

(3) Physical Barriers

Physical barrier control of termites is a prevention and control method that blocks the invasion of termites by setting up physical isolation structures (such as metal meshes, sand and gravel layers, anti-corrosion boards, etc.). Its core logic is to cut off the termites' travel paths through physical isolation. It has the disadvantages of high requirements for laying technology, limited applicable scenarios, and inability to cope with termite behavior. It occupies a relatively small market share in the current termite control market.

Physical barriers have extremely high requirements for laying technology. If there are gaps, poor lap joints, or insufficient depth during laying, termites can easily find a breakthrough. For example, if the particle size of the sand and gravel barrier is uneven, termites may drill through the gaps between small particles; if the welding points of the metal mesh fall off, it will also form a loophole, and the later repair cost is high and difficult. Since installing physical barriers requires damaging the original structure, it is not suitable for existing buildings, and physical barriers cannot function against termites breeding inside building materials, so the applicable scenarios are limited. The complexity and particularity of the scenarios will increase the complexity of laying physical barriers and reduce the coverage rate. In addition, termites can bypass the ground barrier and invade the building through swarming, or secrete formic acid to corrode the barrier material, rendering the isolation effect of the physical barrier ineffective.

Our product: Easy to use, low technical requirements, and wide range of applicable scenarios.

(1) For the target market of individual stock houses, as the quantity purchased by users each time is relatively small, a four-level sales channel of "producer → first-level wholesaler → second-level wholesaler → retailer → household / individual user" should be adopted. The first-level wholesaler makes bulk purchases to cover a wide range, and the second-level wholesaler and retailer achieve coverage of subdivided regions and direct access to users, which is suitable for the long-tail users in the sinking market (groups that account for a large proportion in the market but have small individual user demand scales and relatively scattered demands). The product is a general daily consumer good, and convenient purchase is required, so the sales outlets should be numerous and scattered.

(2) For the forestry industry with centralized customers, a direct sales channel is advisable, which is convenient for delivering the professional value of the product, strengthening mutual understanding and cooperation, better grasping market needs and user opinions. After the enterprise matures, it can participate in bidding projects of the forestry system to obtain large orders. In addition, direct sales enable users to receive more direct services from the enterprise and ensure the rational use of the product.

(1) Online Channels:

Online professional control service platforms are rising rapidly, B2C model accounts for 28% of market share and is expected to more than 40% in 2026.

Seize the incremental market of e-commerce platforms, deeply cooperate with professional prevention and control service platforms, and conduct content marketing on social media platforms.

Highlight selling points such as "safe for mothers and babies" and "easy to operate" in the product details page, and match short video tutorials to reduce the decision-making threshold.

For the B2C model (accounting for 28% of the retail market in 2024), provide a one-stop solution of "pesticide sales + online consultation + local service docking".

Build account on social media, release content such as "insect prevention tips for wooden furniture", implant product usage scenarios, and guide conversions through "immediate discount for orders in the comment area" to accurately reach the young property owner group aged 25-40.

(2) Offline Channels:

Start the service transformation after the stable sales of pesticides, and jointly build a service network with professional institutions, imitating the successful "service +" model.

Reach owners of newly built houses and stock houses through cooperation with property management companies, decoration companies, and building materials markets.

(1) Development Risk: The R & D cycle of new components (such as biogenic pesticides) is long, and during synthesis, insufficient purity during mass production may affect the efficacy due to separation technology.

• Response Strategy: Co-build laboratories with other universities and companies, introduce tools such as AI to simulate effects, and shorten the testing cycle.

(2) Transformation and Application Risk: Laboratory technologies may not be suitable for different complex scenarios. The inactivation of pesticides, poor environmental compatibility, and improper user operation may lead to an actual effect lower than that in the laboratory. For example, the attractiveness of hydroquinone has a concentration threshold. If the concentration is too low, it cannot trigger a behavioral response, and if it is too high, it may have a repellent effect. Humidity, temperature, and soil type will affect the volatilization rate and diffusion range of HQ. The concentration of tea polyphenols needs to reach a threshold (usually 0.1-1 mM) to effectively inhibit the oxidation of HQ. Melittin is easily degraded in a high-temperature environment (>40°C) or an environment rich in proteases.

• Response Strategy: Carry out pilot production in multiple scenarios, collect practical application data jointly with offline institutions, and optimize the dosage form (such as trying slow-release microcapsules, permeable water agents, etc.). Provide a standardized operation manual (such as video guidance) to reduce user operation errors.

(3) Technical Lifespan Risk: Termites are prone to developing resistance to chemical pesticides, and biological pesticides may become ineffective due to target gene mutations; new alternative technologies emerge. For example, the targeted termite-killing preparation based on RNA interference technology has completed pilot production and can be commercially applied in 2027. In the field of physical control, the penetration rate of the Internet of Things monitoring system will increase from 15% in 2024 to 29% in 2025. The microwave termite-killing equipment with non-destructive characteristics has a market share of 41% in the field of ancient building protection, resulting in the rapid elimination of existing pesticide technologies.

• • Response Strategy: Cooperate with property management companies and forestry stations to collect samples, establish a resistance monitoring network, and plan in advance for the iteration of pesticide components and technologies. Reserve technical interfaces, such as improving compatibility with the increasingly intelligent monitoring system.

(1) Market Acceptance: Family users have a bias against biogenic pesticides for their "slow effect" (such as thinking that they are not as effective as chemical sprays immediately), and institutional customers (such as ancient building management offices) are cautious in purchasing due to qualification barriers (such as the lack of cultural relic protection certification for biogenic pesticides); some users are worried about the safety of pesticides (such as risks to children's health), leading to resistance.

• Response Strategy: Break the bias and alleviate safety concerns with actual effect data and endorsements from industry associations. After the initial and stable development of the enterprise, aim to obtain qualifications for ancient buildings and municipal projects.

(2) Market Acceptance Time: Popularizing new components and technologies requires time for science popularization, and during this period, it may be difficult to continue investing due to insufficient funds, missing the market window.

• Response Strategy: Strengthen online and offline promotion channels to shorten the market acceptance time.

(3) Market Capacity and Competitiveness of New Products: The low-end market is filled with low-priced and inferior pesticides (such as imitations produced by unlicensed workshops), squeezing the space for compliant products; international brands (such as Bayer in Germany and FMC in the United States) suppress local new brands with their channel advantages and brand recognition; substitutes (such as physical barriers, intelligent monitoring systems) divert 10%-15% of the mid-high-end demand.

• Response Strategy: Focus on the most competitive market segments.

(1) R & D Investment Risk: The R & D cost of new pesticides is high. If the phased results do not meet expectations, the front-end investment is difficult to recover, and the project may be forced to be interrupted during the testing stage due to insufficient funds.

• Response Strategy: Decompose the R & D into three stages of "laboratory verification-pilot production-mass production", set clear milestones for each stage, and inject funds in stages through equity financing or government special subsidies.

(2) Raw Material Cost Control Risk: The prices of raw materials fluctuate greatly, with an annual increase of up to 20%.

• Response Strategy: Establish long-term procurement agreements with raw material suppliers to reduce the impact of price fluctuations and jointly develop special materials to promote products.

(3) Payment Collection Risk: In the individual consumer market, due to the mismatch between user expectations and actual effects, complex operations leading to failed use, and safety concerns, the return rate of products is high (about 8%-10%). Coupled with the commission of e-commerce platforms (10%-15%), the stability of cash flow is affected. The payment period of government projects is long (6-12 months), and institutional customers (such as property management companies) may delay payment due to tight funds.

• Response Strategy: Accurately convey the product value to reduce mis-purchases and mis-uses. Provide an instant consultation window on the order page and the packaging QR code, and launch an effect tracking tool to avoid subjective invalid judgments by users. Becoming a preferred merchant in the vertical category of the platform can enjoy commission reduction.