In its first joint venture in China, W.R. Grace & Co. will contribute two-thirds of the $6 million funding for a shrink film plant in Gaoming, which will initially make packages for a popular indigenous pork sausage, the company said Nov. 8. Although recently engaged in joint ventures in India, Malaysia and Russia, the joint venture with Foshan Huan Yu Food Packaging Films Co. Ltd. is unprecedented for Grace, a trader with China since the 1800s that in 1993 announced a $250 million company expansion program in the Asia Pacific region.
The most recently announced part of that Asia expansion is a 90,000-square-foot, $40 million plant producing the firm's Cryovac films in Kuantan, Malaysia.
The Chinese venture, called Grace Packaging Gaoming Co., will manufacture polyvinylidene chloride shrink films used for packaging chub sausage, a cooked, nonrefrigerated porksausage staple popular throughout China.
But with the construction of the Gaoming plant, Grace is positioning itself to provide packaging for the as-yet only marginally developed refrigerated product market in the world's most populous country.
``As the food industry in China moves toward a more well-established refrigeration-based food distribution infrastructure, our long-term ... joint venture will help to ensure that the latest Cryovac packaging products and manufacturing processes are readily available,'' said J. Gary Kaenzig, president of Grace Packaging.
Grace will contribute $4 million in working capital, technology, equipment, accounting and market support to the new plant; Foshan Huan Yu Food Packaging Films will provide $2 million in capital, a work force and management services for government liaison and human re-sources. Grace Packaging's Phillip Su will serve as the venture's general manager.
Grace estimates the endeavor will do $70 million in business by 2000. Company officials expect additions of plant production and printing machinery and the introduction of new products and technologies will help expand the company.
Grace, located in Boca Raton, Fla., claims to be the first wholly foreign-owned industrial venture to enter China, with its Shanghai can-sealing operations in 1987.
Ceremonies marking the joint venture's announcement were held in Gaoming, in Guandong province, and featured Jean-Louis Greze, Grace Packaging's chairman; and John J. Warner, vice president, Grace Packaging Asia-Pacific.