China’s Shenma sidesteps trade barriers with $35 million nylon yarn unit in Thailand

Chinese nylon supplier Shenma Industry is investing CNY 252 million ($35 million) to build a yarn factory in Thailand, aiming to circumvent international trade barriers and better serve overseas tire manufacturers. The new plant, located in Thailand's Eastern Economic Corridor, will have an annual production capacity of 20 kilotons of nylon in its first phase, focusing on two types of yarn with a combined annual capacity of 10 kilotons. Construction is expected to take 15 months.

Shenma expects the project to generate annual revenue of CNY 317 million and a profit of CNY 59.1 million ($8.2 million) with a payback period of around seven years. The company will utilize nylon chips from its existing Chinese factories as raw materials and plans to target both local Thai tire makers and exports to North America.

This move by Shenma is a strategic response to the trade barriers faced by its products in the US nited and Europe. By establishing a production base in Thailand, a country increasingly becoming a hub for car tire manufacturing, Shenma aims to avoid trade barriers as Thailand enjoys preferential trade agreements with many countries, allowing Shenma to bypass tariffs and quotas imposed on its products in other markets.

Moreover it will reduce costs as establishing a local production base will cut down on transportation costs and potentially offer more competitive pricing to customers.  Shenma will be able to meet demand effectively being closer to downstream customers in Thailand and North America will enable Shenma to respond to their needs more quickly and efficiently.

Shenma, one of China's leading suppliers of nylon yarn and related products, boasts of an annual production capacity of 162,000 tons. The long-term benefits of this strategic investment are expected to be significant for Shenma's global expansion and market reach.

The construction of this new nylon yarn plant in Thailand is a testament to the growing importance of Southeast Asia in the global supply chain for the automotive industry. It also highlights the increasing sophistication of Chinese companies like Shenma in navigating the complexities of international trade and finding innovative solutions to market challenges.