CHINESE FIRMS INVEST ABROAD IN RUBBER PRODUCTION

Chinese firms invest abroad in rubber production
George Joseph / Kochi Jun 04, 2010, 00:57

China is aggressively promoting leasing of large tracts of rubber plantations abroad, especially in the Asean Free Trade Area, by its companies.

The country’s aim is to ensure enough rubber availability in its market. While the area under natural rubber (NR) cultivation in China is around 9,00,000 hectares, the area under captive cultivation by Chinese enterprises is 8,82,000 hectares, but growing swiftly. By contrast, the total area under rubber in India is 6,62,000 ha.

According to Lu Linhan, president, Guangdong Guangken Rubber Group Company, Chinese companies have rubber plantations abroad mainly in Thailand, Malaysia, Myanmar, Laos, Cambodia and also Cameroon in Africa.

China is facing a serious issue of limited availability of land for NR cultivation. More, productivity of NR is low in China compared to other major producer countries. These two factors have led to a shift in Chinese policy, which now encourages largescale leasing of land in other countries.

Apart from leasing, Chinese companies have also acquired land in rubber producing countries and entered into joint ventures with enterprises abroad. One company, Guangdong Nongken, has established a seedling centre in Malaysia, with annual output of 1.5 million nursery seedlings.

Apart from production, Chinese companies are actively engaged in processing of NR, and several of them have established units in various NR producing countries. Hainan Nongken established a China-Asean NR professional electronic spot trade centre, a logistics centre and an information centre in China. Guangken Rubber started a sales and trading company in Thailand and exports 80,000 tonnes rubber from Thailand to China each year.

Two Chinese companies, Sinochem International and Petrochina International, have started sales and trading companies in Singapore.

Imports of compound rubber into China from Asean countries attracts nil duty, whereas in India the duty is 20 per cent. The tariff on imports from elsewhere was recently cut from a 20 per cent ad valorem one to a fixed rate of 2,000 yuan a tonne.