BASF AG signs agreement in principle for carpet fiber joint venture in China.

MOUNT OLIVE, N.J., and SHANGHAI, P.R.C.--(BUSINESS WIRE)--Feb. 17, 1995--BASF Aktiengesellschaft, China Worldbest Development Corporation, the China Textile International Science and Technology Industrial Town of Qingpu County and the Puding Development Bank Friday signed an agreement in principle in Shanghai to form a joint venture for the manufacture and sale of nylon 6 bulked continuous filament (BCF) carpet fibers and polymers.

Werner Burgert, executive vice president of BASF Corporation and president of the Fiber Products Division, and Zhou Yucheng, president of China Worldbest Development Corporation, signed the agreement and announced plans for the joint venture during a news conference in Shanghai this morning.

BASF has been active in the Chinese market for more than 100 years. It began its operations in China in 1885 by supplying dyes to local markets.

Today, BASF is the largest foreign investor in the Chinese chemical industry. BASF's investments in China, including existing major projects in Shanghai and Nanjing, total DM 650 million. Due to the increasing economic importance of Asia, the headquarters of BASF's South and East Asia/Australia regional divisions were moved to Singapore in 1990. BASF also maintains offices in Beijing, Shanghai and Guangzhou.

"This agreement in principle for the production and sale of nylon is another important step in expanding BASF's market position in China," Burgert said. "BASF has a long-standing tradition of leadership in the carpet industry in North America. We are the number one supplier of pre-colored nylon yarns to the carpet industry. Our solution-dyed nylon yarns have unparalleled color consistency and colorfastness, outstanding wear performance, and superior styling flexibility. We are the first major nylon fiber producer to introduce a 10-year stain removal guarantee to the commercial carpet market.

"Today," Burgert continued, "we celebrate another first as BASF teams up with our colleagues in China to become the first major nylon producer to manufacture and sell nylon 6 carpet yarns and polymers in this country. We have an aggressive pre-market plan in place to move our BCF yarns into China immediately. We look forward to becoming active partners with our mill customers to produce the latest colors and designs for commercial carpets for offices, luxury hotels and other hospitality applications."

The joint venture agreement allows for the production, marketing and sale of nylon and will provide technical services to customers located primarily in China. "This agreement between China Worldbest Development Corporation and BASF for nylon is another major effort by China Worldbest Development Corporation after earlier projects with Hoechst and DuPont," Zhou said. "The total investment, which is planned to reach about $160 million, will exceed the two previous ones. We will produce high quality BCF carpet yarn by using advanced technology to meet the huge demand for nylon industrial, civil and decorative markets and to stimulate effectively adjustments and improvements in the Chinese textile industry.

"The current production capacity here," Zhou continued, "is too small to satisfy the domestic market, especially with its ever-increasing demands for high quality carpets used in hotels, offices, automobiles and the tremendous, potential consumer markets. With our agreement, there will no longer be a need to import high quality carpets. We have a prosperous market in China and we will gain satisfactory profits. The cooperation between China Worldbest Development Corporation and BASF will be the largest in investment terms and the broadest in market share as far as domestic nylon products are concerned."

Plants designed and operated using BASF's most advanced technology will be built in Qingpu County to produce 40,000 tons of bulked continuous filament (BCF) nylon for carpets and 50,000 tons of polymer. BASF is responsible for the basic engineering of the plants, which will be built by Chinese contractors.

Burgert said plant construction will begin in early 1996 and be completed in 1998. Pre-marketing of nylon 6 BCF carpet fibers will begin immediately and be handled jointly by BASF's international sales organization and China Worldbest personnel.

BASF will supply BCF nylon carpet yarns from its modern production facility in Anderson, South Carolina, USA, which features advanced technology and a highly efficient, versatile process to produce multi-colored solution-dyed nylon yarns. BASF will also supply caprolactam, specific nylon 6 polymers, and other raw materials needed for the joint venture's nylon production. BASF will own 75 percent of the joint venture and its partners 25 percent.

BASF employs about 400 people in China and has sales of approximately DM 550 million. The company's main exports to China are plastics and fiber intermediates, fertilizers, industrial and fine chemicals, and products for the textile and leather industries.

China Worldbest Development Corporation is set up under the authorization of the State Council, sponsored by the Textile Industry Ministry, the associated Foreign Economy & Trade Ministry and Bank of Communications. Its multiple business functions include science, industry, commerce, marketing and finance. Import and export transactions are ratified by the Foreign Economy & Trade Ministry. Approved by the State Bureau of Industry & Commerce, China Worldbest Development Corporation is registered in the Shanghai Pudong New Area, and thus enjoys various advantages, including privileged tax regulations. China Worldbest Development Corporation's business is broad, in namely textiles, light industry, chemical industry, metallurgy, machinery and electrical products, various commodities of five metals, construction materials, forestry and agricultural products.

CONTACT: BASF Corporation

Abby Jane Brody, 201/426-2843

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Carpet Trade Press Inquiries:

Lesley Goddin, 212/408-9706