Zhejiang Transfar: Giant of Textile Auxiliaries        

Zhejiang Transfar Co., Ltd. (Zhejiang Transfar, SZ: 0020105) is located in Xiaoshan Economic & Technological Development Zone of Hangzhou, Zhejiang province. The predecessor of the company was Hangzhou Transfar Chemical Products Co., Ltd. founded in 1988. Zhejiang Transfar was listed on Shenzhen Stock Exchange in June 2004.
   The main business of the company includes silicon/organic fluorine fine chemicals, surfactants, textile auxiliaries, leather finishing agent for chemical fiber. The company's 200 varieties of products are in eight main categories. The company is a leader in the textile auxiliaries sector of China. The total capacity of textile auxiliaries and leather finishing agents for chemical fiber is 200 000 t/a. Of the total, the capacity of textile auxiliaries is 150 000-160 000 t/a and the capacity of leather finishing agent for chemical fiber is 40 000-50 000 t/a. Hangzhou Transfar Fine Chemical Co., Ltd. is its wholly-owned subsidiary. The largest shareholder of Zhejiang Transfar is Transfar Group Co., Ltd., holding a stake of 26.3%.
   Both the capacity and the operating revenue of the company have increased constantly from 2005 to 2007. Due to impacts from the global financial crisis, however, the export activity in the textile business of the company reduced drastically in 2008. The prices of raw materials also had great fluctuations. The gross profit in the company was therefore down. The net profit accomplished by the company in 2008 was RMB78.666 million, a drop of 19.29% from 2007.

Product features    

Major products of the company are textile auxiliaries. Textile agents enable textiles to acquire high added value and meet people's "special" requirements through giving them individual character, fashion trend or unique feature. Focuses of competition between enterprises are therefore not traditional factors such as cost control and natural resources monopoly. Technical innovation, fashion trend forecasting and after-sale service are more essential. So there is a distinctive difference between textile auxiliaries and other chemicals in this respect. Zhejiang Transfar has closely coordinated cooperation mechanisms, complete market feedback mechanisms and outstanding technical service. Such advantages can hardly be copied by other medium and small enterprises.
   The higher requirements on the quality of consumables and the higher added value of textile auxiliaries for export both have provided development opportunities to textile auxiliaries in the company. Textile auxiliaries mainly include finishing agents for chemical fiber, pre-treatment and dyeing agents, and post-finishing agents. As post-finishing agents provide softening finishing, special finishing (such as antistatic, UV-resistant, waterproof, flame-retarding and mildew-resistant) and rigid finishing, they can improve the quality of textiles. Medium-grade textile agents hold a market share of 40-50% and high-grade textile agents hold a market share of around 20% in China. Zhejiang Transfar says that its products hold a 10% share of the domestic market. Its products are mainly medium-grade and high-grade varieties. The capacity of post-finishing agents accounts for more than 50% of its total capacity. Despite the high demand of textile auxiliaries produced by the company, the price of raw materials suffered from price fluctuations of upstream crude oil and other chemicals in 2008 and the performance of the company was affected.

Extend industrial chain    

Zhejiang Transfar and its largest shareholder Transfar Group Co., Ltd. signed an agreement in August 2008. Zhejiang Transfar will purchase a 45% stake that Transfar Group Co., Ltd. holds in Taixing Jinji Dyestuff Co., Ltd. and a 20.45% stake it holds in Taixing Jinyun Dyestuff Co., Ltd. The company will therefore get involved in the reactive dye production sector and extend its industrial chain. As the new reactive dye business has some overlap with the sales network of existing agents, combined sales and centralized management are facilitated. After the purchase of stakes in these two dyestuff companies, the reactive dye capacity owned by Zhejiang Transfar will be around 15 000 t/a. The new dyestuff business, however, causes greater environmental pollution. As the Chinese government is paying greater attention to environmental protection, the company will be faced with a greater environmental protection cost in the future.

Occupy southern China market     

Zhejiang Transfar is located in the Yangtze River Delta region with much advanced textile industry. It has a remarkable advantage in geographical location, but its sales in southern China are quite small. To expand its southern China market, the company signed an agreement with Hong Kong Fuwah in March 2008. It will use the operating foundation of textile auxiliary assets of Fuwah in Guangdong province to expand its southern China market, increase domestic market share and upgrade overall market competitiveness through technology/management export and combined net sales.
   Through the extension of its industrial chain and the new market expansion, Zhejiang Transfar has reduced the negative impacts of the economic environment on the company. Because of the economic crisis, the textile auxiliaries sector in China will surely restructure. Some medium and small enterprises will be phased out, enabling the company to integrate its business and further increase comprehensive strength.