BFGoodrich Co. is getting into the pipe-making business, but only in China, and only long enough to grow the market for its Corzan line of post-chlorinated PVC compounds, a company official said.
BFG of Richfield, Ohio, and Wenzhou Youli Plastic Industry Co. of Wenzhou City, China, on Dec. 15 announced plans for a joint venture to produce CPVC pipe for industrial use.
In addition to being BFG's first manufacturing joint venture in China, Sino-U.S. Youli also will introduce the Chinese market to the U.S. company's Corzan compounds.
China's Ministry of Foreign Trade and Economic Cooperation still must approve the deal, but the new joint company, Sino-U.S. Youli Piping Co. Ltd., expects to begin producing CPVC pipe in the first quarter of 1998, BFG spokeswoman Denise Bowler said.
The product will be made in Wenzhou Youli's existing facilities. Wenzhou Youli also will obtain a license to produce and sell CPVC piping systems using the Corzan trade name.
``There is very little or no CPVC in the People's Republic right now. What is used is imported,'' Julian Steinberg, vice president and general manager of BFG's TempRite Engineering Thermoplastics division said in a Dec. 16 telephone interview. ``Our strategy is to establish a market for our product in China.''
Sino-U.S. Youli is BFG's first venture back into producing pipe in recent history, Steinberg said, quickly adding BFG is not a pipe-making company.
``We are a resin and compounds producer,'' he said. ``We have no strategic intent or desire to produce pipe. We view this [joint venture] as an incubation investment. We will be a minority shareholder. The company [Sino-US Youli Piping Co.Ltd.] will be managed locally.''
Steinberg said BFG already scripted its own withdrawal from the new enterprise.
``This joint venture is structured as a cooperative joint venture. This particular form of venture in China is one where one party has a definitive plan to exit the joint venture at a particular point in time,'' he said.
``The small equity position we've taken is just to kick start it and get it going. Part of this agreement is BFG backs out. Years from now we won't be a participant.''
For now, BFG will supply the CPVC compounds and provide technical and marketing expertise to the enterprise, he said.
CPVC pipe resists corrosion in high-acid, high-base and high-temperature environments, he said, making it ideal for use in China's burgeoning chemical industry.
``This is a great opportunity for us to partner with a global leader to bring high-technology CPVC industrial piping systems to [People's Republic of China], Wenzhou Youli General Manager Xucang Hu said in a news release.