Taiwan TPU Makers Expand Production in Mainland China

Taiwan's thermal plastic polyurethane (TPU) makers are aggressively expanding their production capacity in mainland China in order to meet the huge demand from footwear manufacturers there. TPU has become one of the most important materials in global footwear production as producers phase out the use of PVC, which is harmful to the environment. TPU is used for making the soles, cushions, and surfaces of footwear. It is also used for coating electric wires, cables, air-ventilation pipes, and plumbing materials.

According to Jimmy Chang, president of Sunko Ink Co., demand for TPU in mainland China has been growing at an annual rate of 30% to 50% in recent years.

All of Taiwan's TPU makers plan to increase their production capacity in the mainland, where much of Taiwan's footwear industry has relocated in recent years. These manufacturers include Taiwan Ure-tech Co., Evermore Chemical Industry Co., Coating Chemical Industry Co., Sunko Ink Co., and Sumei Chemical Co.


Shooting for the Top


Taiwan Ure-tech, the largest TPU manufacturer in Asia, will set up three plants in mainland China, positioning it to become the largest TPU maker in the world in the next five years, according to Frank Huang, president of the company. When the five-year expansion plan is completed in 2008, the company will have an annual production capacity of 50,000 metric tons of TPU valued at NT$5 billion (US$142.86 million at US$1:NT$35), accounting for one-third of world demand.

Taiwan Ure-tech will set up its first mainland plant in Xiamen, Fujian Province, and later establish plants in Shanghai and Dalian. According to Huang, output from the Xiamen factory will be sold in southeast China, the Shanghai plant's product will be shipped to inland areas, and the Dalian plant's offerings will be exported to footwear makers in South Korea.

With the added production of the Xiamen plant, he continues, by the end of this year Taiwan Ure-tech will have an annual production capacity of 22,000 tons. Investment in the new plant is projected at NT$100 million (US$2.86 million). Taiwan Ure-tech plans to boost its production capacity at a pace of 4,000 tons per year in the next few years, he says.

In addition to the cross-strait market, Taiwan Ure-tech will tap other markets in Asia, including Vietnam, Indonesia, and Japan. Because of its superior quality, Taiwan Ure-tech has become the market leader in mainland China despite the 10% price premium it commands over other Taiwanese manufacturers. However, the company is able to undercut European suppliers by the same percentage.

With the help of this successful price strategy, Taiwan Ure-tech has expanded its revenue by an average of 30% per year in recent years. Last year the company's revenues broke the NT$1 billion (US$28.6 million) threshold. The company expects sales to reach NT$1.3 billion (US$37.1 million) this year and rise to NT$1.7 billion (US$48.6 million) next year.

Taiwan Ure-tech currently has a paid-in capital of NT$72 million (US$2.06 million). In August, the company plans to increase its capitalization to NT$108 million (US$3.09 million) and further increase the amount to NT$300 million (US$8.6 million) within the next five years, Huang says.

Other than TPU material for footwear, Taiwan Ure-tech recently developed TPU thin-film and adhesive-tape materials. Such materials are used in shoemaking as well as in the making of many other products, such as suitcases, bags, and clothing. In the past Taiwan has had to import all of the TPU thin film domestically used. Since introducing the material, Taiwan Ure-tech has grabbed 30% of the local market and it hopes to expand its share to 40%, or 7,000 tons, this year.

Taiwan Ure-tech is also working with a Taiwan university to develop nanotech processes for the production of TPU materials.


Mainland Ambitions


Like Taiwan Ure-tech, Coating Chemical Industry Co. (CCIC) is expanding its TPU production capacity in mainland China with the construction of a new plant in Kunshan near Shanghai. The Kunshan plant will also turn out other innovative PU products, such as PU resin, polyester polyol, accelerators, and cross-linking agents when it begins operation in the third quarter of this year. The plant will have an annual production capacity of 6,000 tons of various PU materials.

In addition to the mainland facility, the 15-year-old CCIC has three plants at the Taichung Industrial Park in central Taiwan. The three facilities have a total area of over 16,520 square meters and employ 83 workers. In Taiwan, the company turns out 10,000 tons of TPU per year.

CCIC president James C. T. Lin says his company has invested over US$2 million in mainland China, where the company plans to focus on the higher-end TPU market.

Due to the high technology threshold extant in the sector, nearly all of the TPU used in mainland China is supplied by Taiwanese manufacturers. Sumei Chemical Co. was the first TPU maker to manufacture in mainland China. It currently has four factories--one in Taiwan, two in Dongguan, and one in Kunshan.

Sunko Ink Co. is building a 1,000-ton capacity TPU plant in Guangdong Province. The plant will also produce other resin-related products.