China's 'King of Plastic Straws' invests $15M in new factory as market shifts

Yiwu, China — The worldwide pushback against single-use plastics is prompting a large Chinese maker of plastic straws to make a sizable investment toward biodedegradable polymer and paper versions.

Soton Daily Necessities Co. Ltd. is investing $15 million in a new 430,000-square-foot facility that will double its size and let it retool its production processes when it opens in July, Lou Zhongping, chairman of the Yiwu-based company, said.

Lou, who entered the plastic straw market in the mid-1990s and has earned the moniker "King of Plastic Straws" in Chinese media, sees opportunities as the market shifts and straw manufacturers are forced to remake themselves.

"I think the change that has happened is a revolutionary change that is taking place in our straw industry," Lou said in a recent interview at his factory.

Soton's market has changed dramatically since January 2018, when traditional polypropylene straws accounted for 90 percent of Soton's output, paper made up 6 percent and plant-based polylactic acid polymer straws were 4 percent.

By the end of 2018, PP straw production had plunged to 60 percent, paper jumped to 20 percent and PLA rose to 15 percent, he said.

"Growing sales of PLA straws began in 2017 but the real growth is seen in 2018, especially after May and June," said Lou, who termed it an "explosion" of orders that, at times, forced the company to scramble to keep up with orders for paper and PLA products.

Lou, who was born in 1965 at the start of the China's Cultural Revolution, has seen a lot of changes in the country and in business in his long career. He's largely self-educated, dropping out of middle school in Yiwu in 1979 to accompany his farmer-merchant parents on trading trips.

Eventually, he started selling plastic products in Yiwu's famous commodity markets and opened a one-room workshop making plastic straws, a business he's focused on since then. Today the company has 500 employees.

But even with his intimate background in straws, he said conditions are changing too fast to make predictions for 2019.

He noted that monthly sales of PLA straws now exceed the total number the company sold in the last 12 years combined, putting a strain on the company's manufacturing.

"All our production processes have to be redone," he said. "We are looking into the transformation of the straw industry in the future."

For example, Lou said the company is investing in new electromagnetic heating extrusion equipment to make the PLA straws. The better equipment will improve product quality and production efficiency, as well as save energy.

The new plant, being built next to its existing Yiwu factory, will carry over energy-saving features from the first plant, like water recycling systems and a green roof system.

He adopted those practices after a business trip to Japan. A keen interest in global business standards, and the need to save every penny, pushed him to integrate those practices into everyday business.

Lou said the move into PLA could help his company boost business with large U.S. customers.

Since straws are a relatively low-margin, high-volume product, Lou said that starting about 15 years ago, he cut back with some big American customers. He didn't want to have too much of Soton's business tied up with any one customer, giving them too much pricing power over his smaller company.

But now he believes the switch to PLA is giving him an advantage that could open more doors at big restaurant chains.

"In the past, we thought it was impossible for us to do an order for McDonald's, because the price they gave us was too low to sustain the healthy development of our company," he said.

"I think what we've got in front of us is a renewed opportunity for us to work with McDonald's, KFC and Starbucks again," Lou said. "After all, we have our unique management and development ability in technology and quality control of production."

But the transformation will take time, as Soton works to improve the process and technology, he said.

"The next three years will be a big challenge for our company," he said. "In this process, we have a lot of things to do. Plastic straws have been used for decades and are very mature.

"However, biodegradable straws have only been produced on a large scale since this year," Lou said. "Therefore, we can imagine that there are many challenges ahead of us."

He said Soton has been doing R&D work around PLA straws for more than a decade, working on cost and a resolving a key design problem: the bendy bit.

"We actually started researching and developing the PLA straws very early, around 12-13 years ago in 2005," he said. "We were the first company that did it in China, and we applied the technology and produced biodegradable straws."

He said Soton worked on the first international ISO standards for PLA straws in 2010.

"But the cost was high. When it was first produced, the price of a PLA straw was five to eight times as much as a regular plastic straw," he said.

Today, he said, PLA straws are still more expensive than traditional PP straws, but the price difference is smaller, now only three to five times as much.

Lou said that with no sign of the shift in the straw market stopping, he's embracing the change.

From June until the end of 2018, Soton's account on WeChat, the all-purpose social media app used by most Chinese, put out 180 articles on the need for sustainable solutions in the fight against single use plastic.

Lou wants to convince his client base that switching to PLA and paper straws is the way to go.

He feels that his company has directly impacted the planet in its sales of disposable plastic straws. For him, straws are just a tool, one that has been used for centuries and that will continue to be used.

"Surely I can't stop producing all at once, because this is about the market, not me," he said. "My enterprise has developed based on the market. With the change of perception of plastic pollution around the world, people now can accept straws with higher prices, so I should ride the wave to promote and influence our customers and our distributors to encourage them to use less plastic straws, and use the biodegradable straws instead."

Seeing the change as an opportunity is part of Lou's strategy.

"It can give our enterprise another life. That is, through this transformation, it is possible to open up a new development space for our enterprise, so that we can create more value for society," he said.

As part of trying to create more value, Lou said Soton is more careful with its production, such as in the kind of glue used in its paper straws.

"If you use a paper straw, there's definitely no problem, it will biodegrade. But the paper straw has a lot of problems with its application," he said. "The chemicals used in the production of the paper, the chemicals in the inks on the paper and the glue used to hold the straw together, all need to be regulated.

"The kind of glue as we use is food safe, but a lot of small businesses who try to reduce the cost will use non-edible glue, because the cost of food-safe glue is three to five times more than non-edible glue," he said. "In this way, some small businesses produce paper straws that are actually harmful for humans."

Lou is working on creating standards for paper straws, but they are not as simple as for PP or PLA because of the different glues and inks.

PLA has downsides as well, he said.

From a business owner's perspective, PLA is less shelf-stable and must be treated with more care than PP straws. Sensitive to heat, PLA straws must be transported in the proper conditions so that the product does not begin to deform.

Providing a heat shield for a container ship carrying the PLA straws pushes up the cost, he said.

From an environmental sustainability standpoint, he said PLA straws are not a 100 percent solution, either.

According to Lou, the company's PLA straw will dissolve into carbon dioxide and water under the proper conditions in 45 days. But in less-than-perfect conditions, he admits, the biodegradation process will be very slow.

With requirements of 50-55° C (122-131° F) temperature and humidity greater than 80-90 percent to biodegrade, in reality that means that many of the PLA plastic straws that his clients are buying will probably biodegrade at the same rate as PP, because they are being disposed of in less-than-ideal conditions.

That hasn't stopped his clients from turning to PLA, though. Lou has noticed a trend.

"Customers in the European Union, in particular, and some states in the United States have begun to limit their plastic usage," he said. "But this doesn't mean we have lost the customers with the limit of plastic straws. In fact, after the customer receives information about government restrictions on plastic straws, their first reaction is to come to us to ask what kind of products we can offer in the place of plastic straws."

He said many of his international customers stopped buying PP straws and then converted completely to PLA or paper.

Rather than foreseeing the death of plastic straws, Lou gets a bit visionary and expects the straw will stick around, albeit in a new form. Maybe the common plastic straw will become edible, he suggests.

"This tool [the straw] is still going to be used 100 years from now, straws won't disappear, right?" Lou said. "But 100 years from now, I'm sure the straws will be 100 percent biodegradable, and it won't cause any white pollution, and will be edible, you can even use it as animal feed. We truly hope this is the long-term direction and ultimate goal that we are heading towards with this product."