Fueled by China's growing automotive market, polypropylene compounder Beijing Ju-Ling-Yan Plastic Co. Ltd. plans to build a new factory in South China next year.
The Beijing-based firm will invest 40 million yuan ($5.4 million) to build an extrusion plant in Foshan. The plant will give the compounder a base for the growing automotive industry in the region, to serve both Chinese and Japanese carmakers.
Guangdong is one of China's largest automobile manufacturing bases, with significant investments from Japanese carmakers Honda Motor Co. Ltd., Toyota Motor Corp. and Nissan Motor Co. Ltd. Honda, for example, boosted capacity at its joint venture in the province, in 2006, to 360,000 cars. That plant exports Honda's Jazz subcompact to Europe.
The slated Ju-Ling-Yan factory for Foshan will have two extrusion lines supplied by Japan Steel Works Ltd., with capacity for about 19.8 million pounds per year.
The plant will complement the company's existing capacity of 44 million pounds from seven extrusion lines at its Beijing headquarters, said manufacturing director Zhang Xin.
Ju-Ling-Yan has expanded capacity in Beijing by about 20 percent in the past year by adding two extrusion lines, Xin said in an interview at APPLAS, the Asian-Pacific International Plastics and Rubber Industry Exhibition, held Nov. 29 to Dec. 2 in Shanghai.
The firm makes PP compounds for car bumpers, instrument panels and other automotive applications, with about 70 percent of its production ultimately bound for Japanese carmakers, Xin said.
Besides PP compounds, it also compounds rubber, using a mix of Japanese and Chinese extrusion equipment.
Xin said Chinese extruder makers need to spend more on research and development to upgrade their equipment, because market demand for more expensive, better-quality equipment is growing.
The 140-employee firm is 55 percent owned by Mitsubishi Chemical Corp., which supplies the technology; 40 percent by Sinopec Group Beijing Yanshan Petrochemical Co. Ltd., which supplies the PP resin; and 5 percent by Toyota Tsusho Corp.
Mitsubishi and its affiliates wield about 40 percent of the Japanese market for PP automotive compounds, Ju-Ling-Yan said.