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SCMP Reporter

FORTY years after being forced to hand over all assets to the Communist Chinese state, British-based multinational Imperial Chemical Industries (ICI) is seeking to rebuild its mainland business empire.

  ICI's mainland operations were shut down in 1956 as part of China's nationalisation drive, and the company has been unable, or unwilling, to re-establish itself there since.

  This is about to change as ICI finalises plans to set up several factories in China and establish joint ventures.

   ICI is one of the world's largest chemical companies, employing 67,000 staff worldwide and operating 200 manufacturing sites in 30 countries.

  Its key products include paints, explosives, plastics and films.

  The company was formed in 1926 from the merger of four British firms - Brunner Mond, Nobel Industries, British Dyestuffs and United Alkali.

  One of its constituents, Nobel Industries, had been selling explosives in China since 1880.

  Brunner Mond, for its part, had set up a comprehensive sales network across the mainland, dealing in alkalis and chemical fertilisers.

  Brunner Mond initially had appointed a missionary to sell its products, but its business grew so swiftly that by 1926 it had 16 branch offices, several hundred depots and more than 600 employees.

  After the formation of ICI, Brunner Mond's operations became the basis of ICI (China), ICI's regional subsidiary.

  The mainland venture expanded its business greatly in the early 1930s, acting as agent for a host of other foreign firms.

  Later in the same decade, ICI's China operation ran up against the country's increasing political turmoil.

  Although it managed to continue trading through the Japanese invasion, World War II and the civil war - ICI's operations were brought to a stand-still by the victory of the Communist Party.

  The restructuring of the economy undertaken by the communists led to the nationalisation of many foreign businesses, including ICI.

  While some trade continued with China from its new regional base in Hong Kong, this was poor substitute for the enormous potential ICI directors had envisaged at the end of World War II.

  It has not been until recently that ICI has sought to re-establish a significant presence on the mainland.

  The first move came in 1991 when it invested in Shanghai's Caohejing hi-tech development zone.

  Last year it set up a paint manufacturing facility in Guangdong in a joint venture with Swire Pacific and a mainland corporation.

  ICI also has opened two representative offices - one in Beijing and one in Shanghai.

  According to the general manager of ICI (China), CL Lu, this level of involvement is still nowhere near enough.

  Recently shifted from Taiwan to Hong Kong to oversee the upgrading of ICI's interests in China, Mr Lu said the company had several other major Chinese projects under negotiation.

  He said the projects would see the importance of ICI (China) within ICI itself becoming progressively greater.

  Barry Matthews, managing director of ICI Swire Paints, the joint-venture company which operates the Guangdong factory, said ICI was involved in negotiations with China to open a paints factory in Shanghai.

  He said the factory in Shanghai, which would be larger than the Guangdong operation, had received agreement in principle.

  He said ICI also was investigating opportunities to establish joint ventures with local manufacturers.

  ICI has plans for another factory, but has yet to announce the location - and plans to open another representative office.

  Funding this ambitious expansion programme is not going to be a problem as the company is financially buoyant.

  Profit figures released at the end of April showed ICI's first quarter pre-tax profit soared to GBP221 million (about HK$2.75 billion), an increase of 138 per cent on figures for the previous year.

  So what kept ICI out for so long? Mr Matthews said: 'We were held back by a certain amount of caution, but that is well behind us now.' 



Conglomerate looks to re-live a glorious past