Shenzhen Sunstar Enterprises Co. Ltd. wants to be North America's Chinese compounding connection — and expand its business beyond that stalwart product of China, shoe soles.
Shenzhen Sunstar runs four Werner & Pfleiderer ZSK extruders in three plants. President Dazhi Zhang has connections in the United States and China, including a stint working for the Chinese government.
Now Zhang, with help from W&P, is looking for new connections — major U.S. customers that would prefer to have a toll compounder in China, instead of just shipping raw materials into the vast country.
Zhang is a native of China. Five years ago, he left a job as a business professor at Iona College in New Rochelle, N.Y., to concentrate on the compounding business. He spends about one-third of his time in New Rochelle, and the rest in China.
``I think there's some advantage for compounding in China,'' Zhang said by telephone from New Rochelle. ``First of all, the potential market in China is great and the economy is now stable.''
The biggest economic question mark right now is whether China, pushed by plunging currencies in other Asian nations, will be forced to devalue the yuan. But Zhang thinks that is unlikely as exports become less important.
``The Chinese government, instead of devaluing their currency, wants to increase internal consumption and demand. And they want high-quality goods.''
Zhang, 35, got into the compounding business when biodegradable polymers were hot. He received his master's degree in mathematics at Beijing Normal University in 1985. After a year at the Ministry of the Electronics Industry, he came to the United States on an exchange program to study math at Ohio State University. At OSU, Zhang decided to get into something more practical, so he transferred to the University of Kansas to earn a doctorate in business in 1990. He won a teaching job at Iona College.
``I left the teaching job for my business in 1993, to focus and concentrate on the Chinese operation,'' he said.
A few years earlier, he and a partner had founded Shenzhen Sunstar Enterprises with backing from the government and private investments.
``The whole group was like a franchise, like McDonald's,'' he said.
Between 1992 and 1994, the company bought 22 W&P compounders, and set up 20 factories all across China. Most of the plants had just one line.
The Chinese government planned a major push into biodegradable plastic packaging and agricultural film. Zhang licensed technology for a cornstarch-based plastic from Agri-Tech Industries of Champaign, Ill. However, according to Zhang, Shenzhen Sunstar quickly ran into problems, when the government dropped a proposed tax on nonbiodegradable plastics.
``So our biodegradable products were more expensive than nonbiodegradable ones,'' Zhang said.
Under the franchise arrangement, each plant had its own management and ownership. After the degradable venture fell apart, Zhang owned three of the factories.
Today, those three plants — in Shenzhen, Beihai, and the Nanjing industrial area in Jiangsu province — make up Shenzhen Sunstar Enterprises.
The 17 other factories are not affiliated.
The company has two W&P ZSK 92s, with screw diameters of 92 millimeters, and two ZSK 58s, with 58mm screws. Screws on all four machines have a length-to-diameter ratio of 44-to-1.
Asmut Kahns, vice president of W&P in Ramsey, N.J. (now called Krupp Werner & Pfleiderer Corp.), handles the account. He returned from his fourth visit to China in May.
``I have known Dazhi for five years now,'' Kahns said. ``He has a high level of integrity. He's a trustworthy individual. He's highly educated, and well-connected, which is very important in China.''
For now, Shenzhen Sunstar Enterprise's biggest business is compounding thermoplastic rubber for shoe soles, a huge market in China.
The company supplies TPR to U.S. shoe supplier J-Von of Leominster, Mass., a subsidiary of new Grange Group.
The shoe compounding business is steady, but Zhang wants a more diverse customer base. Shenzhen Sunstar is negotiating with one major U.S. company for toll compounding work, Zhang said, but he declined to name the customer.
The compounder can serve other markets, including masterbatch color and additives work.
``The equipment is capable of doing a lot of things, but we have not done many things yet,'' he said.
Meanwhile, Zhang's firm still does some biodegradable work, selling material to China, Taiwan and Japan. On a few train lines in China, passengers now are served food in degradable plastics instead of foamed polystyrene clamshells.
``But the volume is not big enough to survive,'' Zhang said. ``And the profit margins are small, if there's any.''