Global specialty chemical provider Degussa AG announced recently it will establish a new joint venture in Nanping to manufacture and market performance silica, which is used in products like tires and toothpaste.

Degussa signed an agreement with Fujian Nanping Xinyuan Investment Co Ltd, a subsidiary of Chinese silica production leader Wellink Group in Nanping, a city in East China's Fujian Province.

With the new subsidiary, the German firm will attempt to strengthen its position as the world's leading producer of performance silica.

Degussa is already the No 1 producer in the silica business in Asia Pacific region, with eight production sites in five countries and a total annual capacity of 175,000 tons.

Its new Chinese partner Wellink began producing performance silica in 1994, and is the market leader in China today.

After final approval by the relevant authorities, which is expected soon, the new joint venture will begin trading as Degussa Wellink Silica (Nanping) Co Ltd, said Eric Baden, regional president of Degussa China.

Degussa will hold a 60-per cent stake, while Xinyuan will hold the remaining 40-per cent stake.

Baden said that the new company has three production sites in China, and supplies regional customers with its performance silica.

"The Chinese rubber industry is currently the major buyer. And we anticipate further growth in the silicone rubber and toothpaste sectors," he said.

The joint venture has its own research centre in Nanping, where it develops new products to meet specific customer requirements, he added.

Degussa offers customers in China a broad range of silica products from five local factories, which are supported by three development centres in China.

The company has established 23 subsidiaries in China since it came entered the market in 1988.

Two years ago, it made a goal to triple its China revenues from 300 million euros (US$362.96 million) in 2004 to 900 million euros (US$1.09 billion) by 2008.

Other than organic growth, the firm has put great emphasis on acquisitions.

Baden said the company has built up an M&A (mergers and acquisition) team primarily consisting of Chinese industry experts to look for Chinese partners.

Source: China Daily