Looking east

02 September 1996 00:00  [Source: ACN]

Expansion into Asia will be one of the strategic goals of Trevira, Hoechst's newly launched polyester identity

By Patricia Adversario

SHORTLY after Hoechst launched Trevira as the new corporate identity for the group's polyester and cellulose acetate business, William Harris, its president, said expansion into Asia will be one of Trevira's strategic goals.

'The reasons we want to have a presence in Asia are obvious. In ten years, at a growth rate in Asia - outside of Japan - that is three times that of Europe or America, the GDP of Asia will be about 40% that of the world. In 20 years, the GDP of Asia could be as high as 50% of the world's GDP. What could be more obvious to us than to follow the customer,' he said.

Trevira's focus on Asia is part of the Hoechst group's overall planned investment in the region which will amount to DM2.5bn (US$1.67bn) by 2000.

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Current total investment for Trevira in Asia is in excess of US$100m. Most of this investment is already on the ground, said Harris. The rest will be completed within two years.

The investment includes three cellulose acetate joint ventures in China, and two joint ventures for spunbound and monofil under Trevira's technical fibre business unit, also in China. The former will start up in Q3 this year. In July, Trevira announced a 50:50 technical polyester joint venture with India's Reliance Industries. Production of polyester industrial yarn with Reliance will begin in 1998. For its polyester film business, Trevira has the Diafoil joint venture with Mitsubishi Chemical, established in 1992.

Taking things in perspective, Trevira's involvement in Asia is still not significant, Harris told ACN.

'We have about 30% of our polyester and cellulose acetate business from North America and 25% from Europe. On a consolidated basis, we have nothing in Asia. And even on an unconsolidated basis, adding in the acetate joint ventures in China and our polyester film venture in Japan, we have essentially nothing in Asia.

'The Asian market for our fibre products is bigger than the North American and European markets. And yet Trevira's investments in Asia are not large, given the size of the market. This is a problem and a challenge for us. To some extent, in many places in Asia, we are already too late,' he added.

On a group basis, only 10% of Hoechst's business currently comes from Asia. 'It clearly should be larger than that, given the growth not just in fibres but in many of Hoechst's products. Instead of 10% of the group's business coming from Asia, at least 20% of the business should come from Asia by 2000,' Harris said.

Senior officials led by Harris declined to say how much Trevira plans to invest in Asia. Said Harris: 'We are not going to invest just so we meet some goal. We are going to invest where it makes sense, as it clearly does in China and as it clearly would in additional investments in India.'

Harris also declined to say what Trevira's targets in Asia are 'because so much of it depends on identification of the right situation. It is impossible for me to predict today whether there will be expansion beyond spunbound and polyester in China or expansion in cellulose acetate or polyester elsewhere in Asia.'

But Trevira will focus on products where it has technological leadership. These include cellulose acetate, technical fibre, PET and packaging resin.

'Our strategy [for fibres] so far has been to take products in which we have a technology leadership - as we do in cellulose acetate, high-tenacity polyester, spunbound and monofil - and take that leadership position to make us attractive to local partners.

'We are still looking for opportunities for high-volume products,' Harris said. He said Trevira is looking at eventual production of PET resins in Asia (ACN 2 September p18).

'The market development for PET resins in Asia is still very young, so there is still some opportunity for participation there,' he added.

One business in which Trevira will be hesitant to invest in Asia is textile polyester.

Alfred Langer, Trevira's deputy president and president for textile polyester for Europe and Asia: 'We are not convinced that we should move into Asia with textile applications. We have no plans at this point.'

Much of the future of Trevira might well be in partnerships, joint ventures, and other sorts of alliances.

'Many of them, we hope, will be in Asia,' said Harris. 'As the western company most committed to polyester research, Trevira is an attractive partner for Asian companies needing technology.'

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