IRVINE, CALIF. - An entrepreneurial Sino-foreign plastics joint venture in China has a lofty goal in place. ``Our goal is to be the Rubbermaid of China,'' Rodney Bell, 49, an Australian native and one-time Price Waterhouse partner, said in an interview in Irvine.
Known as Guangzhou Rodman Plastics Co. Ltd., the venture seeks to lease, form a joint venture or buy technology, using ``molds that are out of vogue in the U.S. but would be state-of-the-art in China,'' Bell said.
The company plans to acquire a pair of injection molding machines with clamping forces of 2,500 tons and a 102-inch extruder in a bid to expand its market and franchise.
``We look at forming a relationship with a U.S. plastics manufacturer that wishes to expand into the Chinese domestic market,'' he said.
``We want to make sure we are ahead of the game so it is virtually impossible, or requires a tremendous amount of capital, for someone to come in and take the market away from us,'' said Bell, chairman of the venture.
The principal market is rapidly developing Guangdong province, which borders Hong Kong.
Macau-born and Hong Kong-educated Sunny Wong, 44, and former Amoco Chemicals Far East executive Harry Gilmore, 64, joined with Bell in creating a corporate structure to benefit from China's encouragement of foreign investment. All three live in Hong Kong.
Last year, the plant's 27 injection molding machines, with clamping forces of 3-1,000 tons, produced 12 million pounds of finished goods. In addition, the plant generated about 8 million pounds of PVC sheet. Virtually all production was consumed in the province.
In December, the plant added an injection molding machine with a clamping force of 1,600 tons to produce large crates, garbage bins and large pails. Yee Kwong Machinery in Dongguang, China, made the machine.
The trading department imports plastic raw materials and additives, exports finished housewares and exerts a major influence on the province's commercial trading of plastics.
The first new 2,500-ton machine is projected to be operational in early 1996 with the second to follow a few months later. The venture will begin production of large mobile garbage disposal bins and industrial-size pallets.
Other equipment will be acquired to produce foam board sheets for air conditioning ducts, instrument housings, signboards, exhibit booths and decorative and structural construction. In many instances, the material will replace scarce timber.
In 1993, the factory began making PVC pipe and fittings for electrical wiring conduit and drinking water purposes using two extrusion lines and several small injection molding machines. One or two extruders, capable of 3-12-mil thicknesses, will be added.
The operation is located in the provincial capital of Guangzhou, China, about 100 miles, or two hours by train, from Hong Kong.
Gilmore values U.S. technology.
``In the plastics industry, the U.S. is ahead of other locations such as Japan and Europe,'' he said.
During more than 20 years with Amoco Corp.'s chemical operations, Gilmore worked as Far East president, based in Hong Kong, and vice president of international business ventures.
Wong said the joint venture expects to export 20 percent of its manufacturing output by January 1998.
``We will export through agencies in the U.S. and Europe, and we will market directly out of Hong Kong,'' Wong said.
Products that are easily packed for shipping would be major candidates for export. Until August, Wong was deputy group chairman and group managing director of a Hong Kong-listed company with significant investments in China. The venture has the capability within its license to use recycled materials.
``We can be an agent for southern China for a recycling distributor in Southern California,'' Bell said.
Guangzhou native Xu Bo Hong, 56, serves as the venture's general manager overseeing 435 factory employees, 29 persons in research and development, a 104-person trading department and an accounting and finance staff of 27.
In 1994, an employee's average monthly compensation was about $188 for wages, housing, food and bonuses.
As of Jan. 23, the joint venture took over a 30-year-old government-organized business that had 1994 sales of $41.9 million. About 25 percent came from making plastic containers and sheet film. Supplying raw materials to the state-owned plastics manufacturers in the province generated the remaining 75 percent. Sales were $34.4 million in 1993.
Each segment accounted for about half of the 1994 pre-tax profit of $2.4 million. Profit was $2.3 million in 1993.
Bell and Wong's investment firm, Pearl River Plastics Ltd., presented its proposals to a May 6 regional investment bankers conference in Washington.
By late June, they expect to secure private funding of $5.5 million by issuing 10 percent preferred convertible stock to individuals and institutions.
In early 1996, they intend to convert the shares to common stock. The goal: a listing on the NASDAQ national market system.
Pearl River, incorporated in the British Virgin Islands, owns 64 percent of Guangzhou Rodman Plastics Co. Ltd. A Guangzhou municipal agency owns 28.3 percent; a cooperative, 4.9 percent; and employees, 2.8 percent.
The venture expects to use at least $4.3 million of the proceeds to acquire capital equipment, probably from U.S. manufacturers.
Irvine-based Garte Torre Global Capital Markets guides the joint venture's entry to the U.S. financial markets and coordinates specialized efforts of Houlihan Valuation Advisers of Costa Mesa, Calif., and Beta Capital Resources Inc. of Newport Beach, Calif.
``The distinct international flavor [of this deal] provides an opportunity and some challenges,'' said principal Richard M. Torre.
Formed in late 1994, Garte Torre deals in mergers and acquisitions, corporate debt and equity financing and international trade finance.
Investor relations company Coffin Communications in Pasadena, Calif., and law firms Whitman Breed Abbott & Morgan in Los Angeles and Boase and Cohen in Hong Kong are other advisers on the complex international deal.