TORONTO-Royal Plastics Group Ltd. has entered the potentially huge market for its plastic houses in China. The Toronto vinyl extrusion major formed a joint venture with Shanghai Land Corp., which is a private real estate developer formed by venture capital firm Ivanhoe Capital Corp., and Wayda, a subsidiary of the China Disabled Persons Federation.
The partners in Shanghai Royal Building Systems Ltd. plan to start production of Royal's vinyl composite housing components in the fall in the Shanghai Songjiang Industrial Development Zone, Royal announced Jan. 16.
Royal has 50 percent of the venture, with Shanghai Land and Wayda holding 40 percent and 10 percent, respectively.
The venture is Royal's second offshore project to make components for its modular housing system, based on extruded panels and posts that lock together and can be filled with concrete and insulation.
Last year it set up a joint venture in Argentina.
Royal will ship housing components from its new Toronto plant until Shanghai Royal's facility begins production. Ivanhoe has raised more than US$8 million so far for the project. Officials were unavailable to confirm a report that the plant will cost about US$22 million and that it will have annual extrusion capacity to make components for 12,500 homes with floor space of 500 square feet.
Shanghai Land holds exclusive rights for the sale of Royal's housing system in China. It was formed a few years ago and is considering a number of real estate developments, according to Ivanhoe spokesman Ray Torresan.
Ivanhoe Capital, based in Vancouver, British Columbia, and Singapore, owns a controlling interest in Shanghai Land. Ivanhoe is controlled by former Vancouver venture capitalist Robert Friedland, who recently moved to Singapore.
Wayda is headed by Deng Phufang, a son of Chinese leader Deng Xiaoping, Torresan said in an interview from Vancouver.
Shanghai Royal will open a demonstration center for the housing technology on Jan. 24 in Shanghai.
Friedland said in a news release that China needs quality housing, especially as many of its 1.2 billion people move from rural to urban areas. He estimated that replacement projects for substandard housing and new demand in urban areas will create a need for 100 million new housing units by the year 2000.