Mergers, Acquisitions and Takeovers Case Study

SINOPEC, DuPont Chemicals JV in China: The Probable Synergies

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Abstract:
In order to meet the fast-growing demand of the Chinese market, China's largest petroleum products producer and distributor, China Petroleum & Chemical Corporation (SINOPEC), formed a joint venture (JV) with the US chemical major DuPont to produce ethyl vinyl acetate (EVA). The JV would install a production capacity of 60,000 tonnes of EVA per annum in SINOPEC's Beijing-based unit Yanshan Petrochemical Corporation and was scheduled to start-up at the end of 2008. SINOPEC would own 55% of the JV and DuPont would hold the remaining 45%. The combination of the manufacturing expertise of SINOPEC and the latest EVA technology from DuPont Packaging & Industrial Polymers will open up new business opportunities to serve different market segments in China. The new facility will enhance the existing manufacturing capability of SINOPEC and will capture the rapidly emerging market demand. In 2007, China had an annual total consumption of 700,000 tonnes of EVA; and with the ongoing economic development, the demand of EVA was expected to increase to 1 million tonnes by 2010. The international JV would also mitigate the investment risk of SINOPEC. The JV would also boost the demand for SINOPEC's petroleum products. But going forward, SINOPEC might face problems on account of conflict of interest, capacity expansion and political interference.

Pedagogical Objectives:

• To discuss the Chinese chemical industry.
• To discuss the dynamics and the growth of Sinopec as an international oil company.
• To analyse the role of the JVs in Sinopec's global expansion.
• To analyse the future of Sinopec's strategic alliances.

Keywords : Chinese chemical industry, Cost advantage, Petrochemicals, Asia Pacific, Sinopec, Upstream, Midstream, Downstream, Refinery, Ethylene, DuPont, Ethyl vinyl acetate (EVA), Performance material, Joint venture (JV)

Contents : 
China’s Chemical Industry
China’s growing importance in Global Chemical Industry
Sinopec’s Presence in China
China Petroleum And Chemical Corporation Sinopec’s Downstream activities
Sinopec Corporate Highlights
Sinopec’s Joint Venture with Dupont
Worldwide locations of DuPont
DuPont and its Business Platforms with contribution
Joint Ventures and Acquisitions