Journey 1995:Non-Stop

Chapter 307 Decides to Enter the Chemical Industry
By 2003, China's chemical industry had already started to take off, with some factories having decades of production experience. In particular, the chemical enterprises under Sinopec and PetroChina were already quite good in the petrochemical field, capable of producing organic raw materials such as synthetic resins and synthetic rubber. However, they were still lagging behind in some high-value-added specialty chemicals.

In the past two years, Yan Hui and Chen Jian have communicated countless times. From the current market perspective, Chen Jian believes that single-component polyurethane sealant is a very promising product, and Yan Hui agrees with this view.

On September 20, 2003, the State issued the industry standard JC/T 482—2003, also known as the "Industry Standard for Polyurethane Building Sealants". This was my country's first industry standard for polyurethane.

This standard states that polyurethane sealant is a polymer suitable for sealing building joints, and it comes in two types: single-component and multi-component.

This standard specifies various performance indicators for polyurethane sealants, including physical properties, surface drying time, exudation, rheology, and sag. Among these, the single-component polyurethane sealant is a "moisture-curing" type, meaning it cures upon exposure to air by reacting chemically with water vapor, gradually curing from the surface inwards.

One-component polyurethane sealants have a wide range of applications, but there are very few manufacturers in China that can produce them on a large scale. According to Chen Jian's understanding, giant companies such as Gaoqiao in Shanghai, Wanhua in Yantai, and Baiyun in Guangdong have this capability, but none of them currently have a flagship product on the market.

It's fair to say that the field of single-component polyurethane sealants is currently relatively untapped in the country.

But this business opportunity was not something only Yan Hui knew about. Since it was relatively untapped, it must be because it was difficult to produce.

In October, Yan Hui went to Beijing to meet Chen Jian. The two had a long talk, and Yan Hui gained a deep understanding of the product project.

To produce polyurethane on a large scale, a special reactor is needed. This reactor can be purchased domestically or imported; the purchasing channels are readily available.

The raw materials for polyurethane production, such as carbon black and polyether, can also be produced by companies in Yantai and Linzi, so raw materials are not a problem.

The biggest problems come from two aspects: investment and technology.

Technically, right now we can only rely on Chen Jian's people. Chen Jian and his wife are a given, and Chen Jian can also bring a few master's students to form the basic team. Of course, the most important thing is that Chen Jian needs to invite his two senior classmates over, even if they only participate for three months, it will definitely be of great help to the progress of the project.

Chen Jian was still somewhat confident about this issue.

So the problem comes back to square one: funding. Building a factory requires two steps: first, experimentation, and second, factory construction. According to the current plan, the initial investment for experimentation will require at least 100 million yuan in equipment and at least 100 million yuan in depreciation costs. As for renting factory space and labor costs, those are no longer important.

The experiment will take no less than a year because Yan Hui doesn't have enough funding to conduct crazy experiments. Every time an experiment fails, he has to review, analyze, and find the problem, which takes time.

It's important to understand that the exact product being manufactured cannot always be determined by the naked eye; multiple calculations are required. Therefore, Yan Hui needs to purchase several more computers.

After the experiment is successful, the next step is to invest in building a factory. This investment will be no less than 10 times that of the experimental period, which means no less than 2000 million.

Yan Hui wasn't in a hurry about this. Building a factory and subsequent investments weren't things that could be done overnight; they could be continuously financed with loans and further investments. True businessmen never worry about investment issues; what they worry about is whether there will be profits and whether there will be a market.

"I feel like I've led you into a trap." Towards the end of the conversation, Chen Jian was a little embarrassed. "I have to emphasize this to you again: once an investment in the chemical industry fails, you'll basically have nothing left but the factory buildings and second-hand equipment. If you're using loans and leverage, I'm afraid you won't be able to handle the volatility. Also, I have to emphasize another thing: my wife and I aren't skilled enough, and we don't know how long the experiment will take. You need to be prepared for a long time without any results."

"I understand what you mean, and I'll also make my stance clear. Since we're going to do this experiment, we're willing to accept the consequences. I hate gambling more than anything, but I've always been brave enough to seize opportunities. The government just issued national standards a few days ago, which means that as long as our products meet the standards, there will be national standards to measure them. You might not understand this, but for our boss, it's more important than anything else. We need national standards for easier sales and for customers to trust us. I think the reason why giants like Wanhua haven't fully entered this field before is related to policy. Now that we have national standards, we can get government subsidies, and the government knows how to subsidize us. In short, this is an opportunity! As for gambling...aren't you gambling too?" Yan Hui laughed. "The times won't give us a second chance."

Doctoral students were highly sought after in this era. Staying at a university as a teacher was a very easy thing, or getting a job at Sinopec or PetroChina was just a matter of passing an exam; there was no difficulty at all.

Now, Chen Jian and his wife are preparing to devote themselves wholeheartedly to this project, which will take at least one or two years, not a short time for the couple who are already 30 years old.

Yan Hui didn't pay Chen Jian and his wife a very high salary, only 3000 yuan a month. What really attracted them was the future stock option incentive. Yan Hui promised Chen Jian that once the factory was officially established, the couple would each receive a certain percentage of stock, which was what Chen Jian wanted most. As for the profit-sharing ratio, that wasn't in a hurry to discuss; the technology was in Chen Jian's hands, so the pressure should be on Yan Hui.

"Mr. Yan, with your courage and vision, I knew I made the right choice in meeting you. I've known you for several years now, and I feel that working with you is the right thing to do. Don't worry, we will definitely sign a confidentiality agreement. If my wife and I achieve success through your investment, and if we sell it privately, you can send us both to jail!" Chen Jian was also a bit carried away, and he became excited upon hearing Yan Hui's words.

"Then let's get straight to it. I'll start looking for factory space to rent, then find workers and buy equipment right away. Give me a list of equipment, and I'll buy it!" Yan Hui wasn't one to drag things out.

(End of this chapter)