Behind the recent launch of China's largest polylactic acid plant stand the Chinese Academy of Sciences and pharmaceutical and chemical maker Zhejiang Hisun Chemical Co.Ltd.

The academy's subsidiary, Changchun Institute of Applied Chemistry, announced March 18 that a new line with 5,000 metric tons (about 11 million pounds) of annual capacity has come on stream, claming the products are "as good as, and some with even better properties" than the world leader NatureWorks'.

The project took off after seven years of research and preparation, the announcement said.

NatureWorks' plant opened in 2003 with a nominal capacity of 300 million pounds (about 136,000 metric tons). But the company has been running at half that capacity, according to a report from PN's sister publication European Plastics News. NatureWorks, however, said it will reach, and probably exceed, its 300-million-pound capacity.

China National Offshore Oil Corp. (CNOOC), which spurred controversy in the United States in June 2005 by offering $18.5 billion to buy Unocal Corp., is finishing up a project that converts CO2 to degradable plastic.

China Blue Chemical Ltd., a subsidiary of CNOOC, announced it will start the production of carbon dioxide-propylene oxide copolymers (PPC) in June, according to China's Shanghai Securities News. The project will be the largest in the world with an annual capacity of 3,000 metric tons, the company said in a press release.

The facility is located in China's most southern province and an island in the South China Sea, Hainan.

The total investment on the project was reported to be around 152 million yuan ($21.4 million).

Heavily dependent on imported oil and petrochemical products, Vietnam is joining the club of bio-based plastics. Tien Thanh Co. Ltd. in Ho Chi Ming City is marketing plastic items made out of wheat or maize flour, a report in the Viet Nam News said.

The product line seems to consist of boxes and cups that are said to decompose in wet environments in 102 days. They cost 40-50 percent more than their conventional plastic counterparts.

The caveat, as I see it, is that the humid tropical nation in Southeast Asia is home to agriculture products such as rice, soybeans and sugar cane, but wheat and maize are not primary crops and the production is limited. Meantime, the soaring food prices in Vietnam will have a great impact on the supply and cost of domestic and imported wheat and corn. The domestic market size for bio-plastic products is also minimal.

With the apparent roadblocks, the concept of corn-based plastic may remain more symbolic than practical for a while.

Medical equipment and supplies manufacturer Henan Piaoan Group Co. Ltd. has sealed an agreement to purchase patented polylactic acid production technology, engineering and equipment from Japan's Hitachi Plant Technologies Ltd.

The project in Changyuan, Henan province, is expected to go on stream in March 2011, with an initial annual capacity of 10,000 metric tons (22 million pounds), according to a press release issued by Hitachi. Piaoan plans to expand the capacity to 150,000 metric tons (331 million pounds) "in the future," with a total investment of 1.83 billion yuan (US$267 million).

Piaoan plans to make medical supplies out of PLA biopolymer and become the first "high-quality, industrialized PLA production base in China," the release said.

Hitachi Plant Technologies developed PLA manufacturing technology in 2004. The company claims its patented technology produces pure, colorless and easy-to-process PLA materials.

Privately-owned Piaoan reported 1.2 billion yuan (US$176 million) in 2007 annual sales. The company didn't comment on the new project. Its corporate Web site, however, said the company invested 300 million yuan (US$44 million) to build 10,000 metric tons of PLA capacity with equipment imported from Switzerland.

One of China's leading manufacturers of bioplastic products, Wuhan Huali Environment Protection Science Technology Co. Ltd., has received US$13.5 million of venture capital funding from DT Capital Partners.

At last week's signing ceremony, Huali Chairman Zhang Xianbing projected 2009 sales to reach 120 million yuan (US$17.6 million), according to the company's Web site.

The 9-year-old company in Wuhan, Hubei province, touts its annual capacity of 40,000 metric tons of biodegradable plastarch materials (PSM), which meet international standards such as EN 13432 and ASTM D6400. Its product portfolio also includes finished products and processing equipment.

Huali said it exports PSM materials and packaging products to more than thirty countries. Sales have been growing at a compound growth rate of 50 percent and higher in the past few years.

Shanghai-based DT Capital, which manages more than US$500 million in US dollar and RMB funds, said China has a greater need to develop biodegradable plastics than developed markets.

"It's difficult to predict the payback period," managing director Zhao Jun said, "but the market prospects are looking good. Huali is the leader of the industry."

Previous news reports show that Huali posted 86 million yuan (US$12.6 million) in 2008 sales and 17 million yuan (US$ 2.5 million) in net profit.

Huali's first experience with venture capital investment dates back three years, when it received $US$5 million from a Hong Kong-based firm.

Huali is not the only bioplastic firm that's gaining popularity from the investment community. According to the 21 Century Business Herald, last year, Tianjin Green BioScience Co. Ltd. received US$20 million from investors including DSM. Also, Shenzhen Ecomann Biotechnology Co. Ltd. obtained investment from Shenzhen Capital Group Co. Ltd.

A trade group official said at an industry conference that among the 200-plus bioplastic companies in China, only 20 percent make profits. "Most of them are still in the early stage of investment," Weng Yunxuan of the China Plastics Processing Industry Association was quoted as saying in news reports.

A bio-plastic manufacturer in Chengdu, Sichuan province, is ready to take advantage of the China-ASEAN (the Association of Southeast Asian Nations) free trade agreement and increase its export of bio-resin film.

Ye wenbin, general manager of Sichuan Corn-T Biology Technology Co. Ltd., has come up with a business plan to export PLA film to ASEAN countries, where the film is processed into bags and then exported to Europe.

Under the free trade agreement, which started on Jan. 1, China and the six richest ASEAN members -- Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand -- eliminated tariffs and barriers to investment on more than 90 percent of the products traded between China and ASEAN, or more than 7,000 products. The zero-tariff status is expected to extend to the four new ASEAN members -- Cambodia, Laos, Myanmar and Vietnam -- by 2015.

Thanks to the zero-tariff, Ye told the Western China Metropolis Daily, orders from Singapore, Thai and Malaysia are on the rise.

Corn-T makes both PLA resin and film, according to a speech Ye gave last year. The company priced PLA film for 30,000 yuan (US$4,394) per metric ton and claimed annual sales of 6 million yuan (US$878,818).

The China-ASEAN free-trade agreement is the world's third-largest regional agreement in terms of economic value, after only the EU and NAFTA.