DSM takes big step for nutritional products in China

The company said it will develop the Xinghuo site, Shanghai, as a "strategic" manufacturing base for DSM.

The move comes just two years after the company started its first R&D centre in China.

Tough competition in global vitamin and carotenoids markets is forcing the vitamin maker to investigate new, more cost-effective production methods, which can be achieved through basing sites in China.

As a result of this restructuring, the Gonglu site, also located in Shanghai, will be closed.

At the Xinghuo site, the production of vitamins, intermediates and green tea extract Teavigo will be expanded, it said.

Vitamin production by the two leading European players, DSM and BASF, has come under significant price pressure from lower cost production and ready supply from China in recent years.

A DSM spokesperson said: " The Xinghuo site will thus rapidly expand to become DSM's largest multi-product manufacturing location in China.

The R&D activities at the Gonglu site will be relocated to the new DSM China Campus, the construction of which has just started."

The Xinghuo site will also host activities of Desotech, Sizings & Binders - which form part of DSM Resins, as well as the savory ingredients plant of DSM Food Specialties.

Jos Schneiders, president of the Nutritional Products arm, said: " With this restructuring, DSM Nutritional Products is making a big step in its growth strategy in China and in the optimization of its asset base for the future, as already outlined in the 'Aspire to Win' program announced in June 2007".

As part of the Aspire to Win strategy, the firm wants to almost double the group's sales reach revenues of US$1 billion by 2010.

Weiming Jiang, president of DSM China, adds: "This is yet another milestone for DSM China.

Shortly after the groundbreaking ceremony of the DSM China Campus, we can now announce that Xinghuo will serve as a strategic manufacturing site for various DSM products, which underlines the importance that DSM attaches to China."

In January DSM announced it would construct a new HQ complex in Shanghai, know as the China Campus.

The complex would include office premises for all business units, as well as R&D activities for some areas - in particular performance materials.

The closure of the Gonglu site is fully supported by the local government, DSM said, adding that around 200 people are working at the Gonglu site and a " social plan and relocation plan have been prepared."