A Chinese petrochemical producer, originally a polyester maker. Its take-off began in 1994 when a husband and wife bought a bankrupt government-owned textile-maker and ran it more efficiently. Facing low margins from extreme competition with other Chinese textile firms, they moved up the value chain into purified terephthalic acid (PTA), a white powder used for making polyester.
In 2010 Hengli broke ground on its first PTA factory on Changxing Island, a formerly agricultural area in China's north-east administered by the nearby city of Dalian. The island, which juts into the Bohai Sea, was designated a special development zone focused on chemicals, offering streamlined approvals, tax incentives, preferential land pricing, credit lines from state banks and regulatory fast-tracking. The government dredged and reclaimed tidal flats and built port facilities. The Dalian Institute of Chemical Physics, an arm of the Chinese Academy of Sciences, has a campus less than ten minutes' drive from Hengli's facilities and collaborates with the company on research.
After several expansions—investment totalling about 25bn yuan ($3.5bn)—the Changxing facility is now the world's biggest PTA producer. China has gone from being a net importer of PTA a decade ago to the dominant supplier, accounting for more than 60% of global production. Companies in Canada, Europe and Japan have all reduced their PTA output or stopped making it.
The same logic that pushed Hengli from polyester into PTA is sending it into ever more valuable parts of the supply chain. In 2019, facing high costs for imported paraxylene (PX), a feedstock for making PTA, it began manufacturing that too. Hengli has also created a unit to build supertankers so that it can transport its own crude-oil supplies.
Economists at the IMF have estimated that the fiscal cost of China's industrial policy is about 4.4% of GDP, much higher than elsewhere.
Whenever I feel like exercise, I lie down until the feeling passes.