Dalian: Few people know the Chinese textile market better than Chen Jianhua, the president of Hengli Group, a leading fabric company in the People’s Republic.
Chen bought a bankrupt textile factory in Jiangsu and started Hengli Group in 1994. Some 20 years later and Hengli Group has become one of the largest weaving companies in the world with more than 60,000 employees. Its end users include world famous names like Nike, Adidas and Toyota.
Despite his heady position within the sector, Chen is aware that China risks losing its top billing for garment exports.
“Currently the textile industry in China is facing many challenges including a decrease in overseas orders, rising labour costs, the appreciation of the RMB, and blind investments from speculators,” Chen says.
Chen believes the industry needs innovations to get through the current difficulties.
“We are always looking for opportunities to diversify our business, but there isn’t much room for chemical fibre textile companies to transform, so we have decided to put our focus on the production of purified terephthalic acid (PTA), which makes polyester. We mostly relied on imports previously, and now we are investing in upstream industries and shipping to grab control of the whole industrial chain,” Chen says.
Hengli Group started a petrochemical subsidiary, Hengli Petrochemical, in 2010, and currently has been developing a PTA manufacturing base on Dalian’s Changxing island, a place that enjoys favourable policies for petrochemical and marine development.
Hengli has allocated an investment of RMB25bn in total for the project. The group has started operation of two PTA production lines in 2012 with total capacity of 4.4m tons each year, which has already made it the largest PTA factory in the world. Hengli Petrochemical completed a sales revenue of RMB43bn in 2013.
According to Chen, the third PTA production line is expected to start operation in September this year and Hengli Petrochemical is expected to increase its sales revenue to RMB60bn this year.
In order to support the production and transport of PTA, Hengli has also developed its own shipping terminal, railway and power plant on Changxing island. The two 100,000 dwt terminals have a joint annual handling capacity of 6.4m tons.
Hengli started its own shipping company, Hengli Shipping, last year and ordered ten 15,000 dwt bulkers, which will be dedicated to PTA transport, at Jiangsu Haitong Offshore Engineering.
Hengli Shipping started operations in July this year following the delivery of the first three bulker carriers. The rest of the ships are expected to be delivered before the end of this year. The company is now the only dedicated PTA shipping company in northeast China.
Chen says the deliveries of the vessels have changed the company’s history of transporting with chartered ships and the new vessels will greatly improve the transport efficiency in the group’s supply chain, adding that the investment in the PTA project and shipping are important steps to complete the group’s industrial chain and ease the raw material scarcity facing the domestic textile industry.
Hengli Group has also invested RMB10bn to develop a new raw material manufacturing base through another subsidiary, Kanghui Petrochemical, on Yingkou’s Xianren island. The phase one project started operations in June this year. Up to now, Hengli has established an industrial network with five manufacturing bases in Suzhou, Nantong, Suqian, Dalian and Yingkou.