Jiahua has eyes on the big-league

Jiahua wants to become a China-based leading chemical company with first-class management and plant safety systems. Simon Robinson interviewed Peter Groome, R&D director to assess progress.

Jiahua is like many Chinese companies operating in the polyurethane market, in that it has grown very quickly. What sets it apart is the actions which are going with its stated desire: to become a world-class player with world-class management, plant safety systems, efficient marketing and sales departments and an independent R&D function of international standard.

It is easy to express these aspirations, many companies do, but what is Jiahua doing about it?

The firm was founded in 1998 in Fushun, Liaoning North China, it built plants in Shanghai in 2007; Binzhou in 2010; Maoming in 2012; and Quanzhou in 2015. The plants make a mixture of polyurethane products, construction chemicals and surfactants.

“We want to be international standard in production,” said Groome.

“There are a number of other Chinese polyol suppliers,” he said, adding “We’ve elected to be at the upper end of the spectrum and to compete more with the majors. There are about 20-30 polyol manufacturers in China of these, there are probably 2 or three with similar goals to us.”

Playing with the big boys

“Of the privately-owned polyol companies in China,” he continued, ”we are by far the biggest. With plant capacity coming on by the end of 2016 there will be 700 kT/year capacity. In China there are a large number of companies making 10-20kT/year,” Groome said.

“We’re definitely different. We do not see the export market as the place to send our excess capacity and then run away from it when you have no excess capacity. We are structuring an export business that is being nurtured and fed,” he added.

The desire to build an export business has driven Jiahua’s progress towards international standards, said Groome. This has included the recent completion of a DuPont safety training programme. This has opened a number of doors for the firm commercially and Jiahua to become a partner with a number of international isocyanate producers inside and outside of China.

“We spent a lot of money working with DuPont on plant and workplace safety. That is now up and running on all four facilities. They are training and upgrading the staff on the plants to the DuPont level,” said Groome.

Looking over the sea

This internationalist approach has helped Jiahua grow. Sales increased with a 36% compound annual growth rate between 2009, when sales were RMB0.78bn ($123m), and 2014 when sales reached RMB3.6bn.

Jiahua is exporting around 27% of output, said Groome. Key destinations to Nafta, South America, Africa, the Middle East and Asia Pacific.

Polyols for polyurethanes are one part of Jiahua’s portfolio. Groome said: “40% of products are for PU; 10% for surfactants and 50% for construction. All of the products are based on EO and PO.”

Jiahua’s Shanghai laboratory plays an integrated role in product innovation and quality control and works across all of these products. It is located in Shanghai’s Pudong New District relatively near to Downtown Shanghai.

“The R&D facility in Shanghai is here to answer customer, as well as monitor plant performance and develop new products,” said Groome.

Jiahua has been renting space in a building since May 2013 and will move locally to larger premises by the start of 2017 if all goes well, said Groome. He added: “We will move to a bigger R&D facility with more characterisation facilities.

“At the moment we use local universities for characterisation. I like this process,” he said. “But there is scope for Jiahua to purchase more sophisticated characterisation equipment. Groome explains that the desire to stay local is because of the rich cluster of polyurethane-related firms in Pudong New District: “The area is rich in chemical companies, Honeywell, DuPont, Momentive, Dow, Henkel. I always find it amazing that when you want to do some development work you can phone them up and they will deliver within the afternoon.

“This is where the R&D facility will stay,” he said.

What's going on in the lab?

The Shanghai laboratory has recently worked on DMC catalysts and NOP research and includes polymer characterisation equipment 

Groome is happy to talk in broad terms about the types of research that Jiahua has carried out in Shanghai: “We’ve looked at catalyst development technology, we’ve looked at carbon-dioxide polyols and improving existing polyols and reducing unsaturation levels,

“We have looked at non-food oils to produce polyols and recycled oils, and we’ve dabbled in non-isocyanate routes to PU,” he added.

“We have the aim to be a broader chemical supplier. We are looking at manufacturing polyesters and are making aromatic polyesters on a small scale at the moment. Our main production by far, is polyether polyols,” he added.

“Ideas come into the marketing team which looks at their possibilities, to see which suit Jiahua and assess their viability in terms of the market.

Peter Groome, Jiahua

Groome continued: “At the Bingzhou facility, [where Jiahua makes styrene acrylonitrile copolymers] we now have an aromatic polyester facility which we are now developing products on. We are becoming a broader spectrum supplier of materials to the polyurethane industry.”

Natural oils will form a part of research, other areas will look at how to use the EO and PO materials, and use them better in the process. There will be a balance of both

Catalysts can be about production efficiency in terms of reducing batch times and it can be about getting polyols of higher quality that can go into other areas.

Away from research, new product development is shared between the downtown lab and the company’s factory in near to Sinopec’s refinery in Shanghai.

“If we want a variation in polyol we would ask the pilot plant to make the material we need” he said, adding, “it is far safer and better to have your pilot plants at locations where you are handling those types of materials.

Further development

Development facilities at the nearby Shanghai plant have the ability to make 1, 5, or 25 kg of specialty products for evaluation or new products production there can be scaled up to 1,10,20,60 or 80 m3 vessels.

In addition to accommodating the pilot plant, Jiahua’s Shanghai facility has a capacity of 250kT/year and this is scheduled to grow. Phase 1 due for completion in the second quarter of 2016 will double the capacity of the plant, said Groome. The site will continue to produce a range of EO and PO-based products for polyurethane, surfactants and construction products.

“The Binzhou plant has 80 kt/year capacity for flexible, rigid and polymeric polyols,” Groome explained