A large sign at the entrance of the chemical industry park in Fuxin in northeastern China proudly proclaims the place to be “the capital of Chinese fluorine industry.” The chemical producer Kingchem has found Fuxin the logical place to locate its manufacturing facilities, which specialize in the production of fluorinated and chlorinated chemicals.
At a time when concerns over the weakest Chinese economy since 1990 make headlines, Kingchem is in robust shape. So much so that the export-oriented firm is putting together plans to approximately double its capacity to support sales that are growing at a sizzling pace.
“Looking at the number of projects in our R&D pipeline, we have a bottleneck in capacity,” observes Stephen Wang, the affable chief executive officer of Kingchem. A former resident of New Jersey, Wang now lives for most of the year in China, where most of Kingchem’s staff and assets are based.
During the past five years, Kingchem’s sales have grown roughly 35% annually to reach about $80 million last year, Wang says. Among the reasons for this remarkable performance, he says, is Kingchem’s ability to provide “Western management and Chinese costs.” Founding Kingchem as a U.S.-based chemical distributor has provided Wang insights into his Western customers’ expectations, he notes.
Kingchem, Wang continues, enjoys a stable base of customers, mostly pharmaceutical and agrochemical firms, for which it is either a primary or secondary supplier. The company further ratchets up its sales every year by developing new chemicals, either on its own initiative or via customer requests. Kingchem employs 60 scientists, the majority of whom work at the company’s R&D lab in Dalian, a large northeastern Chinese city where it is easier to recruit and retain scientists than in sleepy Fuxin.
Kingchem’s success in product development is now stretching the firm’s production capabilities. So Wang is in discussions with private investors in China who could provide the capital required to approximately double the company’s capacity. The fund-raising efforts should eventually lead to a public listing of Kingchem on a Chinese stock market.
The expansion would proceed on an empty lot adjacent to Kingchem in Fuxin. The firm has been in the city since 2002, when Wang, while traveling in the area by car, spotted a seemingly abandoned chemical plant. His inquiries led him to buy a majority stake in the facility. Now wholly owned by Kingchem, the plant produces mostly fluorinated and chlorinated chemicals, but it is licensed to make phosgenated compounds as well.
Since 2010, the area around the Kingchem plant has been administered as an industrial park, the Fuxin Fluorine Industry Development Area, says park director Zhihui Li. The park, Li notes, tracks in real-time the emissions of the 20 or so Chinese and foreign companies located there. Moreover, the park is monitored by closed-circuit cameras.
Even if the park were not monitoring Kingchem, the company would still invest in state-of-the-art environmental management systems, Wang says. He recently bought a costly liquid waste incinerator, a measure that goes beyond Chinese requirements. Many of the company’s customers are multinational firms that cannot risk sourcing chemicals from a subpar supplier, he explains. “We cannot let any issue related to health, environment, and safety get in our way,” he says.
Nor, apparently, the most severe Chinese economic slowdown in 25 years.