South Korean additives maker Songwon Industrial Co. Ltd. plans to buy a 30 percent stake in China's Tangshan Baifu Chemical Ltd., to extend its product range and better penetrate the Chinese market.
Ulsan, South Korea-based Songwon said it has the option of buying up to 50 percent of Tangshan, and company executives said the investment is the first of others they expect to make in China. Terms were not disclosed.
This is just the first step for our global strategy, including in China, said Min Tian, president of Songwon Trading (Shanghai) Ltd., in an April 19 interview at the company's booth at the Chinaplas trade show, held April 19-22 in Shanghai. We are trying to be more and more aggressive in China.
Tangshan Baifu, based just outside Tianjin, is the largest producer of thioester additives in China. Songwon said it will initially focus the venture's manufacturing on its Songnox DLTDP (dilauryl thiodipropionate) and Song- nox DSTDP (distearyl thiodipropionate) thioester antioxidants for China and the global market.
The companies have signed a memorandum of understanding, and expect the joint venture to be operational by Jan. 1.
This JV marks the first step towards building an active manufacturing presence in China and our long-term commitment to backwards-integrate into the production of polymer additives which we don't produce ourselves in our factories, said Songwon Chairman and President Jongho Park.
Tangshan President Weiqi Zhang said Songwon's technology and global networks can help the joint venture become one of the world's top suppliers of thioester antioxidants.
The investment comes after Songwon last week said it was restructuring its China operations to make it easier for the firm to handle future investments in the country. Songwon said it would route additional investments through its Songwon China Ltd. subsidiary in Hong Kong.
As part of that restructuring, Songwon also plans to buy out the partner in its existing joint venture in Shanghai, known as Songwon Brilliant Chemicals Ltd., and take complete control of that manufacturing operation for its liquid formulations, said Tian.
Songwon currently owns 60 percent of that joint venture, with the rest owned by Brilliant Chemicals, but Tian said the two sides hope to negotiate Brilliant's exit from the business in the next six months.
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