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Three Chinese joint ventures
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The Chinese government put out feelers in the early 1980s to the various acetate manufacturers
with the purpose of finding a joint venture partner to build an acetate tow plant in China.
Celanese was the successful negotiator and the seed was sown for what has become an extremely
fruitful partnership. By the time the first joint venture contract was signed in 1987, Celanese
was already providing substantial quantities of acetate tow from its U.S., Canadian, and
Mexican plants.
The first project began with a plant in Nantong, close to Shanghai, which commenced production
of acetate tow in 1989. Acetate flake production, the raw material for tow, was added
in 1994. Since then, the site has been expanded several times through the addition of new machines and de-bottlenecking. Two additional
acetate tow plants were established in Kunming and Zhuhai in 1995. And recently, Celanese and
its joint venture partner China National Tobacco Corporation completed a feasibility study for
further expansion of all three sites. “We’ve been successful here and we continue to be successful.
The return on investment is good, and the future looks bright,” says Ron Norman, General Manager
of the plant in the new economic development zone in Zhuhai. “Our success is the result
of a mutually beneficial partnership. Since our partner, the China National Tobacco Corporation,
is also our customer, this is a captive market, but quality is still very important. We just
have the traditional manufacturing challenges of making a quality product, making as much as we
can, and reducing costs.”
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Trade for technology
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Cellulose acetate is mixed with acetone
before it goes on to be filtered at high
temperature. Only then is it ready for
extrusion.
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Also contributing to Celanese’s success are trade-for-technology agreements signed concurrently
with the joint venture contracts. According to this arrangement, partially in exchange for providing
the technology which was used to set up the joint ventures, Celanese has been the trading
partner for large quantities of tow required to fill the gap between local demand and domestic
production. “Thus, we have been able to reach a relationship which guarantees trading volumes,
and that has been very important over the years,” says Norman.
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Chinese and U.S. managers rotate at the joint venture
sites. Ron Norman is currently General Manager of the Zhuhai
plant.
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Initially, Celanese had enough surplus equipment left over after ceasing the U.S. production of
tri-acetate fibers to equip the sites. But as one expansion followed the other, further equipment
became necessary. Most of this was sourced domestically, taking advantage of the substantially
lower cost of locally produced components. Some equipment continues to be manufactured
outside China because domestic technology is not yet established and, of course, some technology
is proprietary.
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Cultural blending
Celanese’s achievements in China would not have been possible without a high degree
of cultural blending. “Aside from traditional challenges, the biggest is blending the
cultures,” says Norman. “We find we share end-objectives – that is to
say we want to reward investors; we want to have employees who are challenged and happy
to work here and we want to pay them well; we want to take care of the environment and have a
safe place to work; and we want customers to be happy and to want our product. But as managers
we must understand that we can’t always see eye-to-eye on how to get there, and this is
especially true when you have a blend of cultures as in the case of the U.S. and China. One
of our contributions is to introduce western management techniques
to the joint venture organization, but in the end management is a blend of both cultures.”
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Ron Norman attaches great importance to the look
of the site. “It is hard to quantify but the
housekeeping and appearance of the site are important to
quality. It goes with the mind-set. You come here and it’s
spotless and things are polished. It goes along with doing things
right on target and right on spec. It doesn’t cost much
more but it sure makes a difference to attitudes.”
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Norman cites jobs as an example. “It is part of the Chinese culture to want to create jobs, regardless
of whether it is efficient to do so. This is an issue which we sometimes struggle with in our management
meetings. But at the end of the day, it’s the success of the venture which counts. Our China
joint ventures are very efficient - downtimes and yields are very impressive – really
enviable numbers. We’re also finding that good ideas are being generated which we can
transfer to other plants.” Celanese Acetate expects the Chinese acetate tow
market to grow at around an average 1.5 % per year in the 2001-2006 period. That growth could
be significantly higher if acetate continues to replace polypropylene filters which now account
for about 20 % of the filter market in China. This compares favorably with western Europe, where
growth is expected to be only a minimal 0.5 %, and North America, where the market is actually
shrinking. The outlook in the rest of the Asia-Pacific region also remains solid and growth
is anticipated to be around 2 %, but the sheer size of the Chinese market makes it the most
attractive country to invest in.
Success in China has been and will continue to be an important element of the Celanese Acetate
strategy.
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