DSM and Haixing strengthen hydrocolloids business with acquisition of Inner Mongolia Rainbow Biotechnology Co., Ltd. (China)

Shanghai, CN, 10 Nov 2017 12:00 CET

Royal DSM (DSM), a global science company active in health, nutrition and materials, and Zhejiang Haixing Investment Co. Ltd (Haixing), today announced the acquisition of a majority equity stake in Inner Mongolia Rainbow Biotechnology Co. Ltd. The company is renamed DSM Rainbow (Inner Mongolia) Biotechnology Co., Ltd. (DRB). Through this acquisition, DSM and Haixing will be able to expand their global business of sustainable and innovative hydrocolloid solutions applied in food, beverage and personal care products to provide texture and stability.

After an injection of new capital, DSM will own 65% of the shares in Rainbow and Haixing 27%. The remainder will be owned by Mr. Gu Li Quan, the founder of the company. Financial details will not be disclosed at this time. The investment strengthens DSM and Haixing’s ability to serve their global and diverse customer base by meeting growing demand for gellan gum and widening their hydrocolloid product portfolio with the addition of xanthan gum and welan gum.

DSM and Haixing already have a 60%/40% joint venture in gellan gum, DSM Zhongken Biotechnology Co., Ltd. (DZK), in Tongxiang, Zhejiang province. This acquisition also enhances DSM and Haixing’s texture and blending solutions development capabilities. With a current estimated market size of around US$6 billion that is projected to grow to more than US$7.5 billion by 2020, the global hydrocolloids market represents excellent growth opportunities.

Globally, increasing urbanization, trends towards “clean” labelling and growing demand for healthy and convenient food formats, as well as innovation in dairy, confectionery, oils and meat products, continue to boost demand for certain food hydrocolloids, such as gellan and pectin gum.

Dr. Weiming Jiang, DSM China President, said, “This is an important strategic investment, which expands both our manufacturing capacity and innovation competences, enabling us to deliver on our strategy to become a leading and fast-growing global natural hydrocolloids producer. DSM Rainbow is uniquely positioned to be a leading producer of high-quality gums, offering sustainable products, which are in high demand by our customers, both in China and throughout the world. DSM Rainbow is located along the China-Mongolia-Russia Corridor of the Belt and Road Initiative, a strategic location for our hydrocolloids business, planted firmly in China with a global impact.”

Ms. Xiangwei Gong, President of DSM Hydrocolloids, highlighted that, “Globally, increasing consumer awareness around healthy eating and demand for low-calorie and low-fat food products, coupled with further technological development in the food industry, is expected to have a notable impact on the natural hydrocolloid market growth. By acquiring Rainbow, we will be even better positioned to deliver unique, high-value solutions to our food, beverage and personal care customers worldwide. DRB will work closely with DZK where DSM has also built a world-class innovation center. The site will be temporarily shut down for upgrades. In the coming years, DRB will make significant further investments in the site to increase capacity and strengthen its ability to deliver a secure and sustainable supply of biogums.”

Mr. Rongming Wu, Chairman of Haixing, commented, “Since we started the partnership with DSM in 2010, DZK has been expanded and developed based on the global platform of DSM. I am very excited to have Rainbow, a relatively new and attractive player in the industry, joining our dream team. I sincerely hope and believe that we will work together to achieve the goal of building a world-class biogums manufacturing base in Chifeng, Inner Mongolia.”

Haixing

Haixing is an investment company wholly owned by Zhejiang Datong Holdings Group Co., LTD (Datong). Currently, there are more than 5,000 employees at Datong and the main business operates in more than 20 provinces and cities, involving expressway service areas, investments, construction and management, real estate development, tourism services, catering services, biotechnology, financial investment, agro-processing and silk processing.