(Yicai) Oct. 23 -- Shares in Bailong Chuangyuan Biotech soared as much as 7.7 percent today after the Chinese food additive maker said it is investing CNY452 million (USD61.8 million) to build an artificial sweetener factory in Thailand to circumvent trade barriers and reduce production costs.
Bailong Chuangyuan’s share price [SHA:605016] closed up 3.9 percent at CNY26.55 (USD3.60) today. Earlier in the day it hit CNY27.52.
The facility, which will be located in the 304 Industrial Park in Prachinburi, will make sugar substitutes such as allulose and fructooligosaccharides, the Dezhou, eastern Shandong province-based company said on Oct. 20.
Bailong Chuangyuan will set up a local company that will be responsible for investment, purchase of the land, construction of the factory as well as the procurement and installation of equipment. No further details, such as production capacity and construction timelines, were given.
By building a factory in Thailand, Bailong Chuangyuan will be able to get around the high duties imposed by the US, its most important market, and other potential trade risks.
Production in Thailand is also much cheaper than in China as the main raw materials cost far less. The price of corn starch and tapioca starch in Prachinburi and the surrounding areas is between 15 percent and 20 percent less than in China and that of cane sugar is 30 percent less.
Almost half of Bailong Chuangyuan’s revenue came from overseas sales last year at CNY355 million (USD48.5 million). The firm counts big brands such as Quest Nutrition, Halo Top, One Brands and General Mills among its foreign clients.
Editor: Kim Taylor