Jun 22 2010
China Ruitai International Holdings Co., Ltd. ("China Ruitai" or the "Company") (OTC Bulletin Board: CRUI), a manufacturer and distributor of cellulose ether additives for use in the production of pharmaceuticals, construction materials, PVC products, foods and beverages and cosmetics, today announced that through the first five months of 2010 it has increased its customer base by 20% through an aggressive pricing promotion for targeted customers in China.
As a result of decreased cotton production stemming from a cold winter and drought in key cotton producing regions in northern China, the principal raw material of China Ruitai's cellulose ether product line experienced increases in the first quarter of the year. To offset the increase in its raw materials, the Company's production and sales strategy is being shifted to higher margin products including ethyl cellulose, hydroxypropyl methyl cellulose and film coating pre-mixed reagent. In combination with this marketing shift, China Ruitai also deployed an aggressive price promotion that offered a targeted customer base 2009 pricing for initial orders placed in 2010. This promotion was specifically presented to the Company's closest competitors' customers and because Ruitai's competitors increased their prices across the board, the Company's offer was well-received and effective to obtain new customers.
The pricing promotion secured an additional 468 customers during the program's five month period, which yielded approximately $2.7 million in revenue. The total number of Ruitai customers now totals 2,193, an approximate 20% increase in the Company's customer base from the end of 2009. The new customers represented manufacturers who require hydroxypropyl methyl cellulose (HPMC) and ethyl cellulose (EC) to produce their finished goods. HPMC is widely used in the constructive materials industry and particularly those who produce putties, mortar, paints and plasters. Additional customers were secured by the promotion of EC for manufacturers in the pharmaceutical sector who rely on EC for use in the production of pharmaceuticals.
"Due to a colder than normal winter, we were able to anticipate and plan for higher cotton pricing," began Mr. Damming Ma, CEO of China Ruitai. "As the immediate reaction of most producers was to raise customer list prices, we took a more aggressive approach by targeting our competitor's customer base to gain market share. This strategy caught our competitors off guard with several smaller producers closing down and has positioned China Ruitai for further growth. Our leading position in the industry, production capacity, and financial strength provided us ability to support our program. We plan to increase prices incrementally through 2010 to more adequately align prices with raw material costs, which are expected to improve margins. Despite the increase, China Ruitai will remain one of the most cost effective suppliers in the market."