Nantong, Jiangsu – Chinese polyurethane mattress and pillow maker Healthcare Co. said in June it is to set up a plant in Knoxville, Tennessee.
The company plans to pump $50m into the subsidiary, Healthcare US Co. The US business will make, process and sell low resilience, flame retardant foam and the develop home furnishing products. Details of the plant have not been disclosed.
The US site will allow the company to find new growth points. It will also ‘better serve its current clients with lower logistics costs, shortened delivery cycle and more flexibility in supply,’ said the announcement.
Healthcare opened its US sales arm China Beds Direct in Tennessee in 2011. It has built a broad clientele and gained experience in management overseas, said the announcement.
Last year exports as an OEM and under its own label, Mlily, accounted for 82% of Healthcare’s CNY 2.3bn ($347m) revenue. This generated a 26% gross margin. This is significantly lower than a 43% margin for the domestic China market.
Healthcare is following Hong Kong-based foamer and bedding maker Sinomax. That company announced plans to build a plant in Tennessee in 2015. Sinomax said localising production in the US meant it could avoid US-only buyer guidelines on products made in China and sold in the US.
China-US trade is becoming an increasingly important issue for the polyurethane industry.
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