Taiwanese resin maker Chi Mei Corp. is in the midst of a significant expansion of its facilities in Taiwan and on the mainland, boosting manufacturing for ABS, polycarbonate and polymethyl methacrylate.
The company, the world's largest maker of ABS, also is considering putting its first polycarbonate production on the mainland, said James Wang, regional manager for the company's international marketing department. He said the firm expects to make that decision soon.
Chi Mei is adding the capacity because it is finding overall demand for those resins growing at least 10 percent a year, although the company's growth is less, because the market is becoming crowded with a lot of new capacity, Wang said.
Privately held Chi Mei, which is based in Tainan, Taiwan, expects growth of only 6-9 percent a year in those resins, because there are ``more and more suppliers, more and more capacity, and more and more price competition,'' Wang said.
Chi Mei's petrochemical operations are making money, but margins are getting tighter, he said.
He was interviewed March 24 in Taipei, in an interview arranged by the Taiwan External Trade Development Council.
The company is adding 220 million pounds of ABS/SAN production next year at its Zhenjiang, China complex, giving it 770 million pounds. The firm has 2.2 billion pounds of ABS capacity at its plant in Tainan.
As well, Chi Mei is adding 165 million pounds of polycarbonate capacity in Tainan, giving it 308 million pounds total there. And it's building an 88 million-pound plant for PMMA in Zhenjiang, to open in October, he said.
All of its resin is made either in Tainan or Zhenjiang. The company also has polystyrene production in both Tainan, with capacity of 660 million pounds and in Zhenjiang, with capacity of 880 million pounds .
He said the company makes investment decisions based on customer demand and factors like shipping costs, but he said the firm does most of its research and development work in Taiwan.
Wang said the markets for ABS remain strong in Asia, even as sales of the resin fell 9 percent last year in North America. The company's key ABS markets in Asia - electronics, office accessories and pipe - continue to show strength, he said.
The company does not sell heavily into other ABS markets, such as automotive and medical products, he said.
About two-thirds of the firm's resin is sold into mainland China and Hong Kong, while 18 percent is used domestically in Taiwan, with Europe, the United States and Southeast Asia each accounting for 5 or 6 percent, Wang said.
The company's most recent flurry of investment came after some news reports said that Chi Mei's mainland operations were being pressured because its founder and former Chairman Hsu Wen-lung was a supporter of Taiwan's independence movement. In recent years, the mainland Chinese press had been critical of Hsu's political stance, but Hsu wrote a letter distancing himself from that movement.
Wang said the company is increasing investments in China solely based on business reasons.
``We must invest in China for the customer and for the lower labor costs,'' he said. ``The political considerations are not an issue.''
The petrochemical conglomerate in recent years also diversified by setting up a unit to make liquid crystal display screens. That division, Chi Mei Optoelectronics, has become a significant manufacturer of large-size LCD screens, with operations on the mainland as well.
Chi Mei also has units that sell frozen food and provide logistics. In additoin, the company has several nonprofit foundations that operate museums and a hospital.