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February 16, 2015 01:00 AM

Chinese compounders raising stakes in U.S.

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    China's largest compounder has just set up a foothold in the U.S., on the heels of the news of another leading industry player entering the U.S. market through an acquisition.

    Guangzhou, China-based Kingfa Science & Technology Co. Ltd. announced Feb. 16 that it has completed the registration of a wholly owned subsidiary in Michigan.

    The firm, Kingfa Science & Technology (USA) Inc. was incorporated on Feb. 3 with 1,000 shares, records at Michigan's Department of Licensing and Regulatory Affairs show. The company has a registered office address in Ann Arbor, with local lawyer Mark Heusel as the resident agent.

    The move aims to grow its market share in North America, increase its efficiency to serve global customers, and advance its globalization strategy, Kingfa said in a statement. The company also hopes to leverage what it calls “the advantages in policies, technologies and resources in the U.S.” and strengthen its management, technologies and branding.

    Kingfa has not disclosed future investment plans with the new entity, as they would need to be approved by its shareholders as well as the Chinese government.

    Kingfa's site selection for its U.S. subsidiary indicates its interest in the automotive compound market. It already is the largest supplier of automotive compounds in China, selling 238,000 metric tons of materials in 2013, 30 percent higher than the previous year.

    The growth rate in its home market is slowing down, impacted by the macroeconomic environment as well as the auto industry, with automotive compounding reporting a 25 percent volume increase in the first half of 2014.

    In the meantime, Kingfa has started actively expanding outside of China and established its first overseas production site in India in 2013. The India facility also focuses on automotive compounding.

    Kingfa is not the only Chinese compounder that's eying the U.S. market.

    Last month, automotive compounder Shanghai Pret Composites Co. Ltd. announced its acquisition of U.S. recycler Wellman Plastics Recycling LLC, which supplies recycled engineering plastics to the auto industry. Pret made it clear about its objective to gain a foothold in the auto compounding market in the United States.

    In the Feb. 16 statement, Kingfa also mentioned recycled plastics as one of the listed business activities for its newly formed U.S. subsidiary.

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