Chinese additive supplier Shandong Rike Chemical Co. Ltd. plans an initial public offering this year to raise at least 240 million yuan ($35.1 million) to fund expansion, as it plans to bring in an experienced Western top executive to help with its global push.
The Weifang, China-based firm also intends to build an applications lab in North America next year and beef up sales and distribution organizations there and in Europe, as it sees opportunities from cutbacks at some global additive manufacturers.
Privately owned Rike is one of China's largest makers of acrylic impact modifiers and has close ties and a minority ownership stake in Performance Additives, a distributor based in Yardley, Pa. Performance Additives was founded by Arthur Van Nostrand, the former president of additives at chemical maker Arkema Inc.
In an interview at the Chinaplas trade show, held April 19-22 in Shanghai, Rike Chairman Zhao Dongri said the company had about 680 million yuan ($100 million) in sales in China in 2009, and plans to increase its production volumes by at least 50 percent in the next five years.
Rike was founded by Zhao in 2003, and currently has 300 staffers and capacity of about 200 million pounds at five production facilities in Shandong province.
Our intent is to be the No. 1 company in the world of plastic additives, said Thomas Saloom, who holds the dual positions of executive vice president at Performance Additives and senior vice president of research and development at Rike.
We continue to see a shift of the manufacturing business of additives to Asia, he said.
Rike claims 60 percent of the Asian market for additives for foaming PVC, for example, and Saloom said the company believes it can expand globally to take advantage of cutbacks that global firms like Dow Chemical Co. and Chemtura Corp. have made in the additives market.
Saloom said Rike plans to name an experienced Western executive from Performance Additives as its new president. The company recognizes it needs global management to guide its expansion, Saloom said, but he declined to provide more details on the new president.
The company said it plans an IPO for the Shenzhen stock market in China later this year, and will use the money to pay for several new factories, including to make acrylic styrene acrylonitrile modifiers and both chlorinated polyethylene and what the firm terms advanced CPE modifiers.
Rike also plans to set up an applications development lab in the southeastern United States in early 2011, and sees advantages in being able to do customized molecular additive designs for clients, Saloom said.
Performance Additives does about $20 million in annual sales in North America, with the vast majority of those materials coming from Rike, Saloom said. Performance Additives also owns a minority stake in Rike, he said.
He said Rike has strong research capabilities, with 90 research and development staff in China, and has developed materials that in some cases are better than global competitors. He said, for example, that Rike's PVC foaming additives can use 40 percent less material for the same performance.
Customers are getting squeezed, Saloom said. We need to use our technology to help them be more efficient and use less material.
Saloom said Rike's factories operate to U.S. safety and pollution control standards.
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