China’s leading optical fiber and cable manufacturer, Yangtze Optical Fibre and Cable Joint Stock Limited Company (YOFC), and Japan-based Shin-Etsu Chemical Co., Ltd had entered into a joint venture agreement On 23 June 2015.
The joint venture is aimed to produce optical fiber preform, which is the raw material of optical fibers. Both YOFC and Shin-Etsu have agreed to establish a JV Company to promote and develop optical-fiber preform manufacturing, sales, and its related businesses in Qianjiang, Hubei Province, the PRC (People’s Republic of China).
YOFC is one of the leading optical fiber and cable manufacturers based in China. YOFC supplies optical fiber cables worldwide apart from fulfilling domestic demand. Recently YOFC established an optical fiber drawing facility in Indonesia.
Sources say this manufacturing unit known as YOFI is will supply optical fibers to the cable manufacturers in Indonesia. YOFC made joint venture agreements with one of the Indonesian cable manufacturers to set up this fiber drawing facility.
Shin-Etsu is a Japan-based preform manufacturer that supplies optical preforms for various purposes worldwide. Shin-Etsu uses Vapor Axial Deposition (VAD) method to make an optical preform. Sources say Shin-Etsu supplies performs with core and cladding or just core itself to many of the leading optical fiber manufacturers.
Pursuant to the JV Agreement, the JV Company will be held as to 49%, by YOFC and as to 51% by Shin-Etsu. The registered capital of the JV Company is JPY8 billion (RMB400 million) and the total investment is JPY12.5 billion (RMB625 million).
The board of YOFC believes that, with the JV Company, YOFC will have another source of supply of optical fiber preforms which will further reduce the costs of optical fiber preforms, improve the core competitiveness of YOFC, and so on as its profitability.
A joint venture agreement with Shin-Etsu is vital for YOFC. Chinese authorities are planning to implement an anti-dumping law that will ban preform importing to China from the US, Europe, and Japan mainly at cheaper prices. This is to help Chinese preform makers, but at the same time create a shortage of optical fibers in the market.
Chinese fiber manufacturers have been searching for ways to increase preform and fiber drawing capacities to counter the impact of anti-dumping laws. Collaboration with Shin-Etsu will help YOFC increase its production capacity.