Heng Li enters Chinese tissue market with big plans

A leading player in the feminine hygiene and baby diaper sector, Heng Li is starting its first tissue operation at its big Nanan complex in Southeast China. If all goes well, it eventually plans to build tissue mills across the country.

Perini Journal

The newest entrant in the high-quality tissue sector in China, the Heng Li Group, based in Nanan City in Fujian Province in Southeast China, likes to do things fast. With a very flat organizational structure, the family-owned company has been very successful thanks to its ability to decide and act extremely quickly.

As an example, about two years ago the company, which started operating in 1991 in the feminine hygiene sector, decided that it would consider entering the tissue business. Many of its customers had suggested that since Heng Li already supplied them with sanitary napkins as well as baby diapers, it should also consider making tissue products as well.

Within less than a year, Heng Li had not only decided to enter the tissue sector, but had placed orders for numerous converting machines from Perini as well as a new 2.8 m tissue machine from Metso capable of making 30,000 tons per year of high quality tissue. Thus Heng Li skipped the more conventional step of first entering the converting branch for a few years before then adding a paper machine.

GOING STRAIGHT INTO PAPERMAKING. Mr. Wu Jia Rong, the Group’s General Manager, explains: “We had thought about going into tissue converting only, at least initially, and then adding the paper making capacity at a later date. But our company philosophy has always been to control the whole process from start to end and this has worked well for us. Our idea is to make as much of the material that goes into our products as possible. In this way we can make sure the quality is as high as we want it, while also guaranteeing our supply.”

“So we decided from the beginning to install a paper machine as soon as we chose to get into the tissue business. There may be a small risk with doing it this way, but we are confident it will work very well. Demand is growing so fast that we have a great opportunity to get into the market and become one of the top 10 very quickly if we move fast. So that’s exactly what we are doing.”

The new machine was started up in mid 2006 making Heng Li the newest big player to enter the fast expanding Chinese tissue market. The tissue mill and converting lines are located at the Nanan plant of Heng Li, which is an enormous complex that is actually a kind of city within a city. Covering 400,000 square meters, the area includes what must be one hundred buildings including the manufacturing plants as well as residential apartments for the workers, shops, stores and restaurants as well as schools.

The main products presently made at the Nanan plant are sanitary napkins and baby diapers with Heng Li making essentially all of the materials that go into these products, with the exception of wood pulp and super absorbent polymers (SAP). Heng Li has numerous lines for production of nonwoven fabrics and extruded polymer films, as well as the actual napkin and diaper making lines.

CERTIFIED FAMOUS BRAND. Covering much of China, mainly in the Eastern and Southern regions, Heng Li has nine plants for hygiene products. It has a very strong brand in the feminine hygiene field under the “Hao Shu Shuang” brand name in sanitary napkins.

This is a so-called Famous Brand, which is an official recognition by the government that the brand meets quality guarantees, while also having a high market share. Mr. Wu points out that the Quan Zhou region of Fujian Province, where Heng Li is headquartered, has 20 Famous Brands, the most of any region in China.

The company is looking to do the same with the “Hao Ji Li” brand it is launching for its tissue products. The name, which means Good Luck, is already being used for small quantities of facial tissue that it started making in 2005 and will be used for all its tissue products once output ramps up with the new machine and converting lines in the second half of 2006.

TRANSITION TO PAPERMAKING. To help assist with the move into papermaking, which Mr. Wu acknowledges will be more challenging than the making of nonwovens, Heng Li has engaged Mr. Zhang Dao Pei who is an experienced papermaker with more than 50 years in the branch. Mr. Zhang is acting as technical adviser for Heng Li. In addition, the company has hired experienced papermakers from other companies to run the tissue machine.

As far as the choice of Metso’s new DCT 100 model, Mr. Zhang explains that “eventually, we want to add similar machines in several different locations throughout China. Metso’s DCT 100, making 100 tpd and running 2.8 m wide, seems to us to be the best option as far as cost effectiveness and economies, as well as for getting the best paper quality. We are happy to get Metso’s world leading technology in a smaller, simpler package.”

The project is a turnkey for Metso except for construction, and Heng Li said it has had full trust in Metso’s experience and professionalism. Heng Li is also relying on Nanping Paper for engineering, design and construction for the paper machine project. Converting and packaging machines from Fabio Perini SpA and KPL Packaging SpA being added at Heng Li include a Perini Sincro 4.5 as well as Casmatic Single Roll and Facial Tissue Packaging Machines.

BIG PLANS FOR EXPANSION. For the future, Heng Li is thinking big and planning to expand rapidly in tissue to quickly raise capacity to over 100,000 tons per year based on three more paper machines. The goal is to rapidly join the top 10 players on the Chinese tissue market.

The idea is to use the experience at the Nanan plant to develop a successful model that can be transplanted to some of its other production plants throughout China. Mr. Wu says that eventually Heng Li may have tissue operations at all nine of its hygiene products plants.

“First,” he says, “we will prefect the model here at Nanan. Then we will start doing the same thing at the other plants across the country by building tissue operations alongside the napkin and diaper lines. To us it makes a lot of sense to use the existing network of manufacturing plants to add tissue capacity. As tissue is difficult and expensive to transport, we prefer to make it near the markets we are serving rather than at one big mill for the entire country.” •

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