‘Stable’ Business Environment Attracts Chinese Giant
In the fall of 2020, Chinese company Semcorp announced one of the biggest greenfield investments in Hungary of the year, a HUF 65.5 billion (EUR 183 million) project that drew an additional HUF 13 bln (EUR 36.5 mln) in support from the Hungarian government. The 97,000 sqm factory will be built on a 19-hectare site and create 440 new jobs. The Budapest Business Journal spoke with James Shih, vice president for global projects and legal at Semcorp Global, about the company and its first out-of-China development in Debrecen.
BBJ: Why did you choose Hungary as a location? What were the main considerations?
James Shih: We evaluated several countries in Eastern and Northern Europe, and ultimately chose Hungary for several reasons. Hungary has become a hub for the e-mobility industry, and our location in Debrecen gives us proximity to a number of our lithium-ion battery customers. The country provides a welcoming and stable environment for businesses, and especially Chinese businesses, given the government’s steadfast support for the “Belt and Road” Initiative. It also offers a highly skilled and educated labor force at a reasonable cost.
BBJ: When are you planning to finish construction and start hiring?
JS: We expect to complete construction in the second half of 2022. We will likely start the hiring process for top positions later this year, with the bulk of the hiring to be done throughout 2022. We expect production to start in the first quarter of 2023. When we reach our planned full capacity at our Debrecen site, we expect it will be responsible for just over 10% of our overall production of wet-process separator film, based on yearend 2020 data. Our initial estimate for the investment was approximately EUR 180 mln, but our plans are growing and we may revise the number upward as our design work continues.
BBJ: How has the coronavirus affected the firm’s activities including production, orders, revenues, and also markets?
JS: Although we experienced some slowdowns in the early stage of the pandemic, because of our strong management team and workforce, we captured the resurgent market as soon as the virus was under control in China, and achieved the best Q3 and Q4 in the company’s history. Overall, Semcorp enjoyed positive year-on-year growth in 2020 in both revenue and volume. It has also entrenched itself as the global leader in the lithium-ion battery separator film industry by a large margin.
BBJ: What makes it the global leader in this field and to what do you attribute the company’s rapid expansion and success?
JS: Semcorp was founded in 2010, and within a decade had become the largest supplier of lithium-ion battery separator film in the world. In China, we are by far the largest player, serving all of the top Chinese battery makers. We also serve the top battery manufacturers abroad, and aim to become the leading supplier of separator film globally, as we are in China today. In our short 11 years in existence, we have made some acquisitions, but have achieved most of our growth organically. There are a few major contributing factors to Semcorp’s success, including state-of-the-art production equipment, which enables us to produce high-quality products with faster and larger production lines compared to the industry average; a strategic top-tier global customer base; strong R&D capability; and our management’s strategic insights into the industry and regional demands.
BBJ: What makes Semcorp’s technology unique?
JS: The core founders of Semcorp all come from technical backgrounds. Before founding the company, they worked on the research and development of polymer materials at global companies for many years. So, they attach great importance to investing in technology and relentless technical innovation. This focus on technology is evident in Semcorp’s research center, which occupies a 16,000 sqm space at the company’s Shanghai headquarters and can accommodate 500 R&D personnel. It is the world’s largest lithium battery separator R&D center. We conduct R&D on basic raw materials, separator base films, various coating films, manufacturing processes, battery performance evaluation, energy saving, and emission reduction, among other topics.
Additionally, we have established deep collaborative relationships with our lithium battery customers in order to provide customized development services. We have more than 100 product models in mass production, which can meet the separator technology needs of different customers for different purposes.
Semcorp also attaches great importance to the development of next-generation technology. We have carried out a number of projects in theoretical research with world-class universities, R&D institutions, and enterprises.
BBJ: What are some of the innovations and patents that are exclusively to your firm?
JS: Semcorp’s products are used in numerous downstream applications including consumer electronics, e-mobility (including electric vehicles and e-bikes), energy storage solutions (ESS), and power tools, among others. As of yearend 2020 we have more than 400 patents. We are the only separator film supplier in the world that has mastered both water-based and oil-based coating technologies, as well as online separator coating technology (i.e., coating processing is performed at the same time as the base film production).
BBJ: What expansion are you planning in the next two-to-three years?
JS: Over the next few years, the consumer electronics, electric vehicle, and ESS markets are all expected to grow at high CAGRs [compound annual growth rates]. Semcorp is well-positioned to grow with the market and become an instrumental part of the energy revolution. As we further expand our capacity in our six existing production sites in China, we are also moving forward quickly with our European capacity expansion in Debrecen. We are also exploring North America.
Additionally, we recently agreed to enter into a joint venture with the U.S.-based company Celgard, which is the industry leader in dry-process separator film. Semcorp has so far specialized in wet-process film, but we believe dry-process film will see enormous growth in ESS, which are large-scale batteries used in electrical grids to store solar and wind-generated energy. The joint venture will commence activities later this year, subject to regulatory approvals, and Semcorp looks forward to the opportunity to grow in a new market.
We are a Chinese company, and one of our biggest challenges in our next phase of growth is to become a world-class company. We have a small team that is able to move quickly on global projects, and we believe it’s very important to find the right local partners who can support us in the new regions into which we’re expanding.
This article was first published in the Budapest Business Journal print issue of March 12, 2021.
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