If you have an ACS member number, please enter it here so we can link this account to your membership. (optional)

ACS values your privacy. By submitting your information, you are gaining access to C&EN and subscribing to our weekly newsletter. We use the information you provide to make your reading experience better, and we will never sell your data to third party members.



Prosperity Comes To Chinese Silanes Maker Jianghan

A once-obscure firm in central China, emerges as a major manufacturer

by Jean-François Tremblay
September 8, 2014 | A version of this story appeared in Volume 92, Issue 36

A view of a plant site of Jingzhou Jianghan Fine Chemicals, taken from waste water treatment plant.
Credit: Jean-François Tremblay/C&EN
After a period of growth, Jianghan now operates facilities on a 61-acre site.

A decade ago, Jingzhou Jianghan Fine Chemical was a tiny company operating on a dusty road in an obscure Chinese town. Fast-forward to 2014 and Jianghan is still based in Jingzhou, a city in central China that few foreigners could locate on a map. But with $120 million in sales last year and more than 600 employees, it has established itself as a midsized producer of silanes that it exports around the world.

In recent years, Jianghan has experienced extraordinary growth. Founded 16 years ago, it sells to many of the world’s largest users of functional silanes. Its rags-to-riches story mirrors that of the entire Chinese silicon chemical industry. Chinese producers of silanes and silicones have become so competitive that international players all need to source from, or be in, China.

C&EN first visited Jianghan in 2004. At the time, it was operating out of antiquated facilities that seemed more likely to repel than attract foreign buyers. But the company’s president, Shuguan Gan, had just hired a Singapore-trained Ph.D. chemist to run its operations, develop new products, and improve manufacturing quality. And Jianghan was enjoying some success both locally and overseas with silane coupling agents used by tire manufacturers to bond inorganic and organic materials.

Today, Jianghan looks like a different company. It moved in 2005 to an industrial park on the outskirts of Jingzhou where it operates modern facilities covering 61 acres. Its product range has expanded beyond coupling agents to include chemicals such as phenyl silanes used in resin making and alkyl silanes for paints. Gan says the company is profitable enough that it finances any expansion of its facilities entirely from cash flow.

“We are a strong company now because we have hired over the years several people with advanced degrees who have strengthened our R&D,” he says.

Gan founded Jianghan in 1998 when he snapped up a ramshackle silanes plant for about $200,000 with the help of associates who still work under him. When C&EN first visited, the company had 67 employees and annual sales of about $8 million. Back then, the company made only 10 silanes, he says. Today, it offers more than 100, five of which are patented in China. It produces about 40,000 metric tons of silane chemicals per year, a large number for that industry, Gan claims. The company is not listed on a stock exchange and has no intention to go public, he adds.

As Jianghan has grown in size and product range, it has started to compete against the world’s largest players in silanes, a list that includes Evonik Industries, Shin-Etsu Chemical, Wacker Chemie, and Momentive Performance Materials. Those firms are all expanding their presence in China, where the growth of manufacturing is increasing demand for silicon chemicals of all types.

Yet competing against those entrenched giants has not been a problem for Jianghan, Gan claims. In fact, he says his company supplies materials to several of them, noting that confidentiality agreements prevent him from naming names.

Jianghan is now courting its foreign counterparts, Gan says, looking for opportunities that could include a joint venture. “A joint venture with a global player would enable us to better capture opportunities worldwide,” he says. As it is, relying on a network of foreign distributors, Jianghan already books about 60% of its sales overseas, according to Travis Gan, the president’s son and executive vice president. The younger Gan joined Jianghan in 2012 after living in New Zealand where he worked at Fonterra, a major dairy firm.

To maintain their cost-competitiveness, several foreign producers of chemical silicon have chosen to either source from China or produce there themselves, observes Ray Will, a director at IHS Chemical Consulting in Santa Clara, Calif. This is particularly true for the silicones business. The development of the silicon value chain is a national priority in China, he says, partly because the government strongly supports the solar-panel industry, which requires silicon wafers. From 2009 to 2014, China also tripled its capacity to make siloxane, a material used in the production of silicones.

“The newest, largest, and most modern plants are in China,” Will says. “Western and Japanese suppliers of silicones need to source from China in some way or other, either by buying materials from there, or building their own facilities to lower their costs.” Jianghan, he says, is just one of many Chinese players that have grown significantly in recent years.

But Jianghan is far from being just another silane supplier, Shuguan Gan insists, and for several reasons. First of all, the firm has a stable workforce, which is rare in China. Whereas other Chinese producers minimize costs by paying their workers as little as possible, staffers at Jianghan are well compensated and rarely leave, he says. At about $1,000 a month on average, salaries are high by Chinese standards and low by international ones. Benefits include subsidies to buy cars, plus foreign trips for the best performers.

Second, Gan says his firm emphasizes environmental and safety controls. Failure to do so, he adds, could mean loss of the right to operate as the Chinese government clamps down on firms that pollute or pose safety risks. Major foreign buyers, moreover, audit their suppliers before placing orders and do not buy from firms without stringent environmental and safety practices. Silane chemistry requires particular care. IHS’s Will says many silane compounds, as well as the intermediates used in their production, are volatile and highly reactive.

Finally, Jianghan stands out from its Chinese peers for its commitment to R&D as an engine for long-term success, Gan says. “We are aiming to create a company that will be around for over 100 years,” he says. It employs 40 chemists, some of them trained abroad, who work in a well-equipped lab.

Travis Gan says Jianghan learns what it needs about new markets from its foreign distributors. But silanes are often used in specialized markets, Will observes, and developing products that work in those applications requires close collaboration with customers. Companies that don’t have technical centers near their customers will be handicapped in the development of new grades and applications, he says.

“It’s part of the very definition of a specialty chemical producer to be working closely with users,” Will points out. Chinese firms have struggled to succeed in the specialty chemical business, he says, because they often lack technical support centers outside their country. “It’s the R&D that allows Western and Japanese producers to withstand competition from Chinese producers.”

Jianghan managers are no doubt aware of this handicap, which could be one reason for their interest in a joint venture with a foreign firm. An alternative approach would be to go overseas alone. Ambitious, yes, but given how far the firm has come in the past 10 years, perhaps not too great a leap.


This article has been sent to the following recipient:

Chemistry matters. Join us to get the news you need.