Haohua Yuhang: Finding Opportunities in the Crisis       

Haohua Yuhang Chemical Co., Ltd., located in Jiaozuo, Henan province, is affiliated with China Chemical Industry Group Corp. At present, the company's annual production capacity of the main products of caustic soda and soda ash have reached 400 000 tons each, liquid chlorine capacity is 100 000 tons, calcium carbide capacity is 300 000 tons.
   In January 2009, while the nation-wide chlor-alkali industry average operating rate was less than 30%, Haohua Yuhang operated at 50%.But the impact of the global financial crisis is unprecedented. Haohua Yuhang realized its own advantages in scale, domain, customer resources and downstream chain compared with other companies in the same industry. And the key to cope with the crisis is to build upon these advantages and to find the right point to turn the crisis into opportunities.

Measures to reduce losses    
   
Since September of 2008, the selling price of PVC fell dramatically, and Haohua Yuhang adjusted its strategy to this situation in time. The company stopped running its 80 000 t/a septum caustic soda, 120 000 t/a ionic membrane caustic soda and PVC manufacturing units, turned its emphasis to 20 000 t/a caustic soda, 20 000 t/a PVC manufacturing units with high quality techniques and low cost, located in Qinyang, Henan province, and regulated its production load according to market requirements. The arrangement avoided a loss of RMB2.7 million monthly.
   To cope with the short supply of basic raw materials like calcium carbide and bunker coal, Haohua Yuhang started emergency response planning of purchasing at the best time, and ascertained the price and quantity of the raw materials daily.
   By the method of making good use of and activating the stock, Haohua Yuhang compressed its raw material storage to the lowest warning line and reduced its purchasing cost by about RMB10 million.
    In the products selling aspect, Haohua Yuhang optimized the selection of management areas and clients. Haohua Yuhang temporarily quit the market in southern China, which it had occupied for 20 years, selling 80 000 tons there annually, just because of the long selling distance and high transportation cost. The new strategy is to fully exploit the eastern China and northern China markets, and make stepwise improvements in the market share in Henan province.
   By implementing diversity selling and PVC secondary pricing, Haohua Yuhang made the whole year's sales-output ratio and the capital recovery rate reach 100%, gaining a profit of RMB30 million.

New products     

The financial crisis can enlarge both the disadvantages and the advantages of the enterprises. Faced with the financial crisis, the most urgent thing is to ferry the current difficulty, but from the view of long term development, exploring the new markets and digging a wider profit space is much more important.
   In fact, since the beginning of 2008, under the principle of reasoning and plan approval about the energy and fee saving after technical reconstruction, Haohua Yuhang invested RMB11.68 million, completed 42 debottleneck projects, and increased its profit by RMB8.30 million. Haohua Yuhang also developed "type 7" and "type 8" general resins and three types of YH 1700, 2000, 2500 high polymerized resins, moving away from the single variety product and making a good base for coping with the crisis.
   At present, Haohua Yuhang sells the new product at the price RMB200-300/t higher than the usual products. Meanwhile, Haohua Yuhang did the scientific research projects like matt PVC resin, shortening polymerization of "type 3" resin, etc.

New projects    

Haohua Yuhang put forward an argument in setting up big projects and finding big business opportunities in the crisis.
   In March 2008, Haohua Yuhang built a 20 000 t/a trichlorosilane project, the unit went into production in November, and will annually increase a pre-tax profit of RMB90 million. (CCR2008 No.36)
   At the same time, the company's 5 000 t/a wide agricultural film project with an investment of RMB30 million has been put into operation since May 2008, and will annually gain a pre-tax profit of RMB12 million. A silicon tetrachloride research and development test project begun in December 2008 has now gone to the pilot scale test.