Berry Plastics Corp. plans to ratchet up its presence in China, agreeing to join forces at a new plant with an Asian packaging partner.
The Nov. 15 agreement gives Berry an 80 percent share of a manufacturing plant under construction in Foshan, China. Southern Packaging Group Ltd. of Singapore will control the other 20 percent.
Southern Packaging makes plastic bags, film and bottles for food, consumer and personal-care packaging. On Nov. 12, Southern Packaging began trading as a publicly held company on the Singapore Stock Exchange. Its sales reached S$46.7 million (US$26.8 million) in 2003.
Berry also holds a 10 percent stake in Southern Packaging; another 25.3 percent is traded publicly and most of the rest is in the hands of company directors, according to a prospectus. Berry's part-ownership role helped cement the relationship, said James Kratochvil, Berry executive vice president and chief financial officer.
``We were searching for some time for a strong partner with the experience and respect in the Chinese market,'' Kratochvil said Nov. 17 by telephone. ``We wanted a partner that was fairly sophisticated and technologically advanced. Southern Packaging is that partner.''
Southern Packaging is completing the plant on its Foshan campus. The plant's size was unavailable. The firm also makes blown film and blow molded bottles at nearby facilities in southern China and Hong Kong.
The Asian firm will invest S$4.1 million (US$2.5 million) in the building, which is to open early next year, according to the firm's prospectus. Berry will send machinery and molds to the plant, Kratochvil said. During the next few months, Berry will decide which products to mold in Foshan. Options include open-top containers, drink cups or caps and closures.
Berry's capabilities include injection molding and thermoforming, but it has not decided whether both processes will be offered in China for market penetration in the Far East, he said.
``We expect it to be a very high-growth market,'' Kratochvil said. ``It is where this country was several years ago in terms of opportunities.''
The Chinese site is Berry's first in Asia. Berry also has U.S. and European plants and a sales office in Mexico City.
Berry is owned by Goldman Sachs Capital Partners and J.P. Morgan Partners. Berry recorded sales of $607.5 million for the first 39 weeks of its fiscal 2004, ended Sept. 25. The firm reported 2003 sales of $747 million.