YCF Drives into Field of Automobile Decoration Fabrics

On August 3, Yihua Yuhui Fibre Industry Company Limited (Yihua Yuhui), jointly established by YCF (the biggest domestic polyester-producing base) and UNIFI Inc. in the U.S. (UNIFI, the biggest manufacturer of polymer yarns for functional fabrics in the world), was unveiled and officially put into production. Afterwards, YCF's long filaments would enter the new field of automobile decoration fabrics, with the added value of its products and its competitiveness further improved.

In recent years, the polyester development in the world is under constant adjustment. The world's polyester industrial Centre is moving to China, the biggest producer and consumer of polyester in the world. The development of long filaments, especially industrial decoration fabrics and automobile decoration fabrics, is very rapid.

Their development trend is sound and the market space broad. Demands for fine denier filaments, differential and functional fibre are dramatically on the rise. It is predicted that with the climaxing of automobile consumption in China, the domestic market of automobile fabrics mainly for decoration are speeding up its development at the same time.

The market demands will amount to RMB80 billion.

In Chinese enterprises, the proportion of manufacturing automobile decoration fabrics is relatively low, with even less enterprises manufacturing automobile decoration products with high added value. In the past, automobile decoration fabrics of high and intermediate grades were mainly imported. As the competition of domestic long filament products is very fierce and the profit ratio rather low, it's only by developing new products and turning out products with high added value that YCF can exploit a larger market space and win the market competition.

Before establishing the joint venture, YCF organized its Long Filaments Department. The department, responsible for scientific research to develop a large number of differential long filaments, has gained a lot of profit.

YCF sets its development goal of long filaments in fields of new products including automobile decoration fabrics, in which domestic enterprises have not completely involved themselves. In order to co-develop differential long filament fibre focusing on automobile decoration fabrics, they grab market opportunities to jointly invest and cooperate with UNIFI to enter the new field of automobile decoration fabrics home and abroad.

The total investment in Yihua Yuhui is US$90 million, with YCF and UNIFI each contributing 50%. YCF injects the assets of the south area of its Long Filaments Department into the joint venture, while UNIFI invests with cash. The major business of the former Yihua No.5 Polyester Plant is production and sales of various kinds of fibre and long filament products.

UNIFI, one of the top 500 listed company in the U.S., enjoys advanced technology in spinning and processing and leads in automobile decoration fabrics, with its fibre for automobile decoration accounting for 80% of market shares in the U.S. Most U.S. companies including Fort, Kreisler and GM use UNIFI's products.

After the establishment, Yihua Yuhui will specialize in production, processing and sales of differential long filament fibre and relevant products as well as the research and development of polyester and spinning products. YCF introduces advanced technology and differential long filament fibre from UNIFI that boast sound market perspectives, which help the restructuring of its assets and reduce the fixed cost of its products.

After the cooperation, two parties' technology, capital and talents will be used to develop competitive new products to enter the field of automobile decoration fabrics. Meanwhile, the original 1,820 employees of YCF will be collectively transferred to Yihua Yuhui.

An UNIFI official said that the joint venture would achieve US$0.5 billion annual sales revenue within 5 years. The two parties will make efforts to establish a differentiation filament manufacturer that takes the lead both in China and the world.

Vice Chairman of China Petroleum and Chemical Corporation Wang Jiming, Vice Governor of Jiangsu Province Li Quanlin and UNIFI Chairman and CEO Peng Lai'en attended the unveiling ceremony for YCF's establishment and made speeches.

1 Pages