Green tea's popularity extends well beyond China. To keep up with growing demand, DSM, the Dutch nutritional products firm, plans to expand production of Teavigo, a green tea extract, at its Xinghuo site near Shanghai.
Xinghuo is being turned into a strategic manufacturing site for various DSM products and it will expand to become DSM's largest multi-product manufacturing location in China. The downside of the restructuring is that a manufacturing facility at Gonglu will be closed. The R&D functions previously done there will be relocated to DSM's future China Campus headquarters, construction of which has just begun.
The closure of the Gonglu site is fully supported by the local government, DSM says, and a social plan and relocation plan have been prepared for the 200 people who work there.
The DSM announcement is interesting on two counts. First, it shows that restructurings are not confined to manufacturers' “legacy” installations in the west. Multinationals with extensive operations in China now realise that the competitive advantage they once enjoyed risks being eroded as competitors also take the same well-trodden path.
So, they are now looking at ways to optimise their Chinese operations — often a hotch-potch of fragmented sub-scale facilities — so as to drive greater cost savings.
Second, its interesting to see DSM stressing how it is working to reduce the inevitable social impact of the closure. While the measures are hardly going to be as generous as those offered to equivalent workers in the west, its good to see this western company taking its corporate social responsibility seriously in China.