Investor Relationship platform Jihuibao: Fujian Supertech Advanced Material signs deal to build a vacuum insulation material manufacturing facility in Hefei, Anhui province

2021-07-26 17:55 806

SHENZHEN, China, July 26, 2021 /PRNewswire/ -- Jihuibao, an investor relationship platform, issued the following article about Fujian Supertech Advanced Material Co., Ltd.:

On the evening of July 19, Fujian Supertech Advanced Material Co., Ltd. (Supertech) (688398.SH), a Chinese insulation materials company listed on the Shanghai's STAR Market, announced the signing of an investment cooperation agreement with the government of Huagang, a town in Feixi County, Hefei, whereby the firm will build a vacuum materials production plant in the town. The facility is scheduled to be built in two phases. A manufacturing facility for vacuum insulation materials, including vacuum insulated panels and cooler boxes, will be built in the first phase with an investment of more than 500 million yuan (approx. US$75 million), while a vacuum material manufacturing and industry chain support facility will be constructed in the second phase, with the amount needed for the investment to be determined separately after the completion and start-up of the first phase of the project.  

A spokesperson for Supertech said that the tie-up with the Huagang government will enable the company to expand its business in the home appliance market while strengthening its capabilities in providing services to customers and responding to their needs by attracting talented individuals in Hefei, the capital city of Anhui province that is home to numerous universities and colleges with abundant talent resources.

Notably, Supertech's share price has experienced a rise since July 20, 2021 following the announcement of the agreement, resulting in a continued increase in trading volume. At market close on July 23, the company's share price stood at 46.7 yuan (approx. US$7), up 24.87 per cent over the prior three days, with transactions totaling 213 million yuan (approx. US$31.9 million) in value.

Supertech benefits from local policies in tandem with quickly meeting customer needs and speeding up market expansion

A vacuum insulated panel is a component that enables thermal insulation by maintaining a vacuum state within the panel for a long period of time. As there are no universal standards for such panels, and the panels cannot be altered once produced, they are tailored according to specifications decided beforehand, including size and shape, making it necessary for buyers to customize the panel according to the design of the end product. As a result, in order to better meet the diversified expectations of customers, it has become essential that Supertech improve the overall quality of services while optimizing each step across the entire service chain.

Supertech has established relationships with a number of well-known Chinese home appliance producers, including Whirlpool, Haier, Midea and Meiling, all with production facilities in Hefei, in addition to collaborating with white goods suppliers that have received investments from abroad, among them Siemens, Samsung and LG, which have all built a presence in neighboring provinces and cities. Taking these various elements into consideration, the establishment of a vacuum material industry manufacturing center in Hefei helps consolidate the service chain, which is of great significance to enhancing the support services and increasing the speed at which the firm responds to customer needs.

In addition to meeting customer needs quickly, Supertech, an upstream supplier in the industry chain, benefits greatly from the favorable policies put in place by both the municipal government of Hefei and the provincial government of Anhui to facilitate the development of the sector.

As part of the mission to transform the city into one that is welcoming to manufacturers of all stripes, the Hefei municipal government issued a series of favorable policies to home appliance makers, making it easier for them to obtain project approval, financing guarantees and land on which to locate a production plant. In particular, in May 2014, the city took the lead in launching a policy package grouping together numerous policies and regulations in an effort to enhance its support for the sector. In 2017, Hefei announced a policy designed to facilitate the city's embrace of Industry 4.0, with a focus on strategic emerging sectors, including smart home appliances. In the meantime, Hefei's 13th Five-Year Plan for E-Commerce Development was issued with a mandate to create an e-commerce cluster serving the industries that the city is known for, among them, home appliances.

On April 21, 2021, the Anhui provincial government rolled out its contribution to the 14th Five-Year Plan (2021-2025) for National Economic and Social Development and the Long-Range Objectives Through the Year 2035. One part of the plan specifically calls for the enhancement of Anhui's manufacturing capabilities in the smart home appliance sector especially in the fast-growing cities of Hefei, Wuhu, Chuzhou and Ma'anshan, with the aim of raising the visibility of the province worldwide.

With the policies put in place by the Hefei government providing a major assist, Supertech, by choosing to place its manufacturing there, foresees further expansion in the home appliance market encompassing the city and surrounding areas. Supertech's already well-established recognition and multiple years of experience in production and technologies are expected to also go a long way in assuring the success of the new facility.

The double challenge of the implementation of a stricter environment policy and fiercer market competition led to an inevitable shift to high-end products in the refrigerator market

Hefei, with more home appliance manufacturers than any other city in China, is home to the production facilities of seven 7 well-known international brands - Whirlpool, Haier, Midea, Gree Electric Appliances, TCL, Changhong and BOE Technology Group - in addition to 10 established domestic brands, among them, Meiling, Royalstar, Diqua, Kinghome and Zungui. This has allowed the city to build a unique position globally.  The high concentration of domestic brands and the enhanced competitiveness has led to the city earning the moniker of the Capital of Home Appliances in China.

However, with the implementation of a stricter environmental policy across the country and the heightening of the Matthew Effect in the refrigerator market, shifting to high-end products became an inevitable trend. Hefei learned quickly that it must keep pace with this growing trend if it wants to keep the moniker and stay well ahead of the competition.

One particular challenge is the requirements of the environmental policy in that Chinese refrigerator and freezer manufacturers generally employ polyurethane foam boards as the thermal insulation material. The boards use blends of C5H10 and HFCs as the main foaming agent.

Early in 1997, HFCs were listed in the Kyoto Protocol as one of the greenhouse gases. According to the National Measures for the Administration of Carbon Emission Trading (Trial) recently released by the Chinese government, greenhouse gases are natural and human-induced gases that absorb and re-emit infrared radiation and include carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF6) and nitrogen trifluoride (NF3).

HFCs, a component of polyurethane foam, have been included in the global list of controlled greenhouse gases. According to the schedule set by the Kigali Amendment to the Montreal Protocol, which officially entered into force on January 1, 2019, most developing countries, including China, will freeze the production and consumption of HFCs in 2024 and achieve a 10 per cent reduction from baseline by 2029 and 80 per cent by 2045.

Notably, there is no suitable alternative to polyurethane foam.

It is not only expensive but also difficult to improve the technology and performance of foam compressors given the limited use of traditional foaming agents. As a result, refrigerator producers use vacuum insulation panels instead of traditional insulation materials as part of their efforts to reduce energy consumption.

The Matthew effect has been heightened across the refrigerator market since the beginning of this year as a result of the continued rise in prices for key raw materials, among them, copper, aluminum, steel and plastics, leading to fiercer competition. The growth engine of the market has shifted from growing demand to an upgrade of the product mix, also an inevitable trend.

Citing an example, Haier, one of Supertech's key customers, has experienced exceptional sales performance for its high-end brand Casarte. According to a report from China Market Monitor (CMM), Haier occupied a 38.5 per cent share of the online refrigerator market and 40.8 per cent of the offline market for refrigerators in terms of retail sales during the first quarter of 2021, up 2.5 and 1.4 percentage points respectively from the same period of 2020. Of note, Haier ranked first in the sector in terms of market share with Casarte coming in second, further consolidating the home appliance manufacturer's leading position in the market. Furthermore, Casarte held a 13.2 per cent share of the refrigerator market, up 3.2 percentage points on a year-over-year basis, with market share of its high-end refrigerators priced at over 15,000 yuan (approx. $US 2,250) growing to 43 per cent of the market for premium units.

Pei Dongmin, research director of the Home Appliance Unit at All View Cloud (AVC), a Beijing-based big data integrated solutions provider, said that in order to enhance market competitiveness, refrigerator manufacturers need to accelerate their shift to a diversified portfolio of high-end offerings and explore new revenue streams by increasing the proportion of premium refrigerators.

According to statistics from CMM, refrigerators with capacities of 500 liters and up took a 35.8 per cent share of the online market during the first quarter of the year, representing a year on year rise of 7.3 percentage points, while their share of the offline market also grew 9.3 percentage points to 53.7 per cent. Online market share of refrigerators priced at over 6,000 yuan (approx. US$ 900) rose 6.4 percentage points year on year to 13.3 per cent while their share of the offline market also increased 10.2 percentage points to 54.1 per cent. The market share of refrigerators priced at over 10,000 yuan (approx. US$1,500) surged 8.1 percentage points year on year to 26 per cent.

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Source: Jihuibao