Sep 25 2007
RadiciGroup Plastics and Lati Industria Termoplastici SpA have signed a letter of intent to form a fifty-fifty joint venture to develop the Chinese engineering plastics market.
The constant growth of this Asian market offers attractive opportunities for businesses with a strong international presence and a wide range of products.
The surging Chinese auto industry, the huge potential arising from the modernization of the electric power grid and electrical equipment, the growing pool of domestic appliance buyers, the large investments in infrastructure, the increasing hunger for high quality goods: these are the factors that will have an increasing influence on Chinese growth, which up to now has been tied to the competitive advantage of low-cost labour.
For these reasons, the two Italian companies have decided to take the plunge and join forces in China. Lati SpA is among the world leaders in self-extinguishing compounds for the electrical and household appliance sectors. In the plastics sector, RadiciGroup is a leader in engineering plastics for automotive applications.
RadiciGroup Plastics has two strengths that ensure high product and service quality standards: the vertical integration of its polyamide (nylon) chain and its strong international presence.
Lati SpA is a highly specialized company with a wide range of products that can meet a multitude of requirements, including those of high technology sectors.
These strong points will enable the companies to meet the needs of the most demanding customers.
The joint venture’s headquarters and production base will be in Suzhou, 80 km from Shanghai, at the RadiciPlastics Suzhou Co., Ltd. compounding plant, started up by RadiciGroup in April of this year. The joint venture will manufacture and sell a broad range of engineering plastics under their corresponding brand names in the Southeast Asian market — China, Hong Kong, Taiwan and Singapore, in particular.
Furthermore, the joint venture will market all the compounds produced by both parent companies that, for the time being, will not be manufactured at the Chinese site, as the production lines are not yet installed.
Francesco Michele Conterno, chairman and managing director of Lati SpA, pointed out the bright prospects that will arise from setting up the joint venture: “This agreement with RadiciGroup will allow both companies to provide more and better services to customers in the Chinese market. It will be an excellent opportunity to strengthen our presence in a very promising market.”
Angelo Radici, chairman and CEO of RadiciGroup, and Maurizio Radici, vice-chairman of RadiciGroup, stated: “Thanks to our collaboration with Lati SpA in the Chinese market, we will enhance our presence and experience in this Asian country with the specialized know-how and reliability of our partner, which has already carved out a leadership position in the electrical/electronics sector of the plastics industry.
Although they will join forces in China to take advantage of their potential synergies, RadiciGroup Plastics and Lati SpA will be free to pursue their respective strategies elsewhere in the world. By forming this joint venture in the Far East, Lati SpA and RadiciGroup Plastics are taking a unique and competitive approach to confronting the challenges of this gigantic Asian market.