(Yicai Global) June 3 -- Chieftain Control Engineering Technology has joined a long line of Chinese companies entering the hemp sector after a surge in related stocks this year.

The Beijing-based pharmaceutical systems provider plans to invest USD14.5 million in cash and equipment to set up a subsidiary in either Canada or the United States, it said in a statement yesterday. The firm will use its own intelligent planting system to grow, process and extract hemp to offer integrated solutions for customers.

A string of Chinese firms from a range of industries have started to work with hemp this year as investors look to pile cash into the emerging sector. Yatai Pharmaceutical, Hybo Pharmaceutical, packaging maker MYS Group and Guilin Layn Natural Ingredients are just a handful of such companies.

While many benefited from a sharp rise in share price after announcing their plans, Chieftain stock [SHE:300430] closed down 2.11 percent at CNY13.9 (USD2.01) today, falling harder than the Shenzhen bourse benchmark which slumped 0.74 percent.

Demand for hemp products and extracts are growing rapidly internationally because of an amendment to the US's 2018 farm bill, the statement added. The bill incorporated provisions from a proposed Hemp Farming Act the same year, which suggested making hemp a regular commodity rather than a controlled substance.

Chieftain hopes the move will improve its international business, spur revenue growth and overall profitability, it added. The firm did not rule out partnering hemp growing experts and researchers to refine its methods.

Editor: James Boynton