The Chinese company Yunnan Energy New Material (Semcorp), the world’s largest manufacturer of battery separators, is planning to launch its first overseas factory in Hungary and aims to increase its global market share to 50 percent by 2025. The company has dispatched approximately 100 employees to the Hungarian factory and is currently recruiting locally. The factory, with an investment of approximately €340 million, is expected to start production in 2023.

Battery separators are essential components in lithium-ion batteries that prevent short circuits and regulate the movement of lithium ions between the positive and negative electrodes during charging and discharging. Yunnan Energy New Material surpassed Japan’s Asahi Kasei in 2018 to become the global market leader in the separator market. By 2022, the company had achieved a market share of 37 percent.

Yunnan Energy New Material’s overall production capacity reached 7 billion square meters by the end of 2022. The company recently held a groundbreaking ceremony for its second-phase factory in Suzhou, Jiangsu Province, and plans gradually to establish and expand factories in China. By 2025, the production capacity is expected to reach 16 billion square meters, a 2.3-fold increase from the current level.

The company’s revenue for the 2022 fiscal year increased by 58 percent compared to the previous year, reaching ¥12.5 billion, and its net profit increased by 47 percent to ¥4 billion. Yunnan Energy New Material has experienced continuous revenue and profit growth since its listing on the Shenzhen Stock Exchange in 2016, driven by the rapid development of Chinese battery manufacturers such as CATL and BYD.

While the company faces competition from technologically advanced Japanese and South Korean enterprises, it maintains a cost advantage due to its overwhelming production scale. Its customers include major battery manufacturers such as Panasonic and Samsung. However, the company faces three major challenges in achieving further growth: technological gaps with Japanese and South Korean competitors, economic security concerns between China and the United States, and the risk of oversupply in the separator market.

Yunnan Energy New Material has approximately 500 researchers, including Chinese experts who previously worked for Asahi Kasei and Toray. While the company is catching up with leading Japanese and South Korean companies in terms of quality, battery industry experts believe that expanding market share in Europe will require higher technical capabilities. Entry into the vast US market also poses difficulties due to the potential exclusion of foreign companies from tax incentives under the Biden administration’s inflation reduction law.

In the global market for the four main lithium-ion battery materials (positive electrodes, negative electrodes, separators, and electrolytes), Chinese companies hold a market share of 74 to 88 percent, while Japanese companies’ presence is declining. The focus of the market share battle will shift to the next generation of batteries, including semi-solid-state and all-solid-state batteries, which are expected to improve battery performance and safety.

Overall, Yunnan Energy New Material is aggressively expanding its presence in the global market, but it faces challenges in terms of technology, economic security, and potential oversupply. The company aims to leverage its production scale and continue its research and development efforts to remain competitive in the evolving battery industry.

Source: Nikkei, May 24, 2023
https://zh.cn.nikkei.com/china/ccompany/52475-2023-05-24-05-00-00.html

Recently, Russia announced an offer of the port of Vladivostok, its most important unfrozen port in the Far East, to China as an internal port. Russia claimed that it has completed the preparation for China’s mass shipping needs.

China plans to  open the port officially on June 1. It hopes this will boost the economy at the Northeastern provinces, especially for Heilongjiang and Jilin, which have no access to the sea and have to transport their goods entirely over land, or partially to the port of Dalian and then ship them over the sea. Once Vladivostok becomes available, they can transport their goods to this seaport first (which is at a much shorter distance) and then ship the goods out. Also China’s foreign trade goods can go through Vladivostok without tariffs and other taxes.

One analysis said that Russia previously planned to develop its Far East region with Japan and South Korea as partners.  It was afraid that China might dominate the Far East as its power grows. However, this plan didn’t get very far. Now Russia finally agreed to offer it to China, showing it truly takes China as its best partner in developing the Far East. This will also trigger more trade between China and Russia.

Some people suggested that Russia has been forced to give China Vladivostok. Being that it is suppressed and sanctioned by the West for its invasion of Ukraine, Russia can only look east and rely on China.

Following this model, Russia may also open a seaport on the Japan Sea to the Chinese navy, allowing China to set a foot into the Japan Sea and counterbalance the U.S., Japanese, and Korean naval forces.

Some background information is that China’s history claims that Vladivostok, whose Chinese name Haishenwai (海参崴), was under the Qing Dynasty’s rule and was ceded to Russia in 1860 as the Qing government was no military rival to Russia.

Sources:
1. Sohu, May 18, 2023
https://www.sohu.com/a/676627195_121470982
2. Net Ease, May 16, 2023
https://www.163.com/dy/article/I4SQNHJC05561Y1A.html