Lanxess, Germany's third-largest chemical company, yesterday initiated its investment strategy in China by signing an agreement with its Chinese partners to launch a joint venture in Anhui Province.

The project aims to build a new plant in the province's Tongling City to manufacture antioxidant Vulkanox, a material used to protect rubber compounds from material fatigue.

The venture, funded by Tongling Xinda, Anhui Tongfeng and Lanxess, will be the first foreign company to manufacture the material in China, said Martin Wienkenhover, who sits on the board of Lanxess AG.

Lanxess already produces this important rubber chemical in Europe, India and the United States.

"The new venture is part of the strategic plan Lanxess has worked out to expand its market share in China," said Wienkenhover.

He did not disclose the level of investment involved.

"As a newly-listed company in Frankfurt, it is required to keep its investment in China confidential," said Wang Yongli, managing director of Lanxess China.

He said a detailed investment plan in China is expected to be revealed later this year.

Wang said Lanxess is only a minority partner in the venture and the antioxidant will be marketed exclusively in China. The venture will come online in the second half of 2006.

"By setting up a production facility in China, we are establishing an important bridgehead for supplying our Chinese customers," Wang said.

He added that through this venture, Lanxess will be able to participate to a greater extent in the rapidly expanding national and international tyre industry in China.

"Studies show that tyre production in China has grown by around 30 per cent a year since the new millennium started," he said.

To date, Lanxess has established four production bases in Shanghai, Wuxi of Jiangsu Province, Qingdao and Weifang of Shandong Province.

"A number of projects will be launched in these bases later on and reliable partners will be sought," Wang said.

Source: China Daily