Asia Bio-Chem Group Co. Ltd. (“Asia Bio-Chem” or the “Company”), through its wholly-owned subsidiaries is a leading manufacturer of corn starch and related by-products in China. The Company produces cornstarch, corn germ, gluten and fibre per year for the Chinese domestic market.
The Company’s primary product, cornstarch, is used in the manufacturing of hundreds of food products including MSG, fructose, maltose, glucose, dextrin, citric acid and lysine. Cornstarch is also used to produce sugar alcohols such as sorbitol and mannitol and is used to produce a wide variety of modified starch products for the pharmaceutical and fine chemical industries. Corn germ is used by the Company’s customers to produce corn oil used for cooking or in producing margarine. The gluten and fiber products manufactured by the Company are used by livestock farmers as animal feed.
Asia Bio-Chem’s manufacturing operations are located in the northeast region of China.
The Company’s newly relocated Changtu facility is 130 km north of Shenyang (Capital of Liaoning) and has a processing capacity of 300,000 tonnes of corn per year.
The recently completed Daqing facility is located in Zhaoyuan County which is 160 km south west of Harbin, the capital city of Helongjiang province. The Daqing facility is one of the largest and most modern wet milling plants in China with a total processing capacity of 600,000 tonnes of corn per annum.
Both of these facilities are situated in regions of concentrated corn farming. The company uses both truck and rail to ship its products to the port of Yingkou on the Yellow sea which provides a cost effective means of shipping our products to customers in the south of China.
Strategy
Asia Bio-Chem has developed a strategy centered on our geographic presence in the Northeast region of China. By locating our production facilities in this rural region of China we are able to take advantage of the abundance and relatively less expensive corn from this region. In addition, the lack of competition in this area has led to significant government incentives oriented around rural development initiatives.
The primary reason we are able to enjoy these advantages is that this location is not near any large urban markets and, as such, the cost of transportation has meant that few of our competitors have located in this region. With higher corn and product prices coupled with improvements in infrastructure the relative cost of transportation has become less of a factor to getting our product to market.
Further, given our proximity to modern ports in the Yellow sea, we are able to transport our products to the Pearl River Delta and the markets in the south of China. Given the low cost of sea transportation, we are able to bypass the more competitive markets in central China and focus in the south where the climate is too warm for corn and therefore few corn processors.
Asia Bio-Chem has spent much of 2010 putting in place its rail transportation system from the Daqing plant and refining the land to sea logistics. Our company has implemented intermodal transportation systems from the Daqing plant which has enabled us to achieve continuous loading at the plant while speeding up the transfer at the port to the containership.