Global science company active in health, nutrition and materials, DSM, and investment company, Haixing, have announced the procurement of Inner Mongolia Rainbow Biotechnology.
The agreement
The acquisition results in the new company being renamed as DSM Rainbow (Inner Mongolia) Biotechnology (DRB). This move comes as DSM and Haixing, through their extended partnership, look to strengthen their hydrocolloid solutions business.
Following this acquisition, the duo plan to expand their “global business of sustainable and innovative” hydrocolloid solutions applied in personal care, food and beverage products to provide texture and stability.
After receiving new capital, DSM will own 65% of shares in the biotechnology firm and Haixing will own 27%. Gu Li Quan, the founder of the company, will own the remainder of the shares. Financial details had not been disclosed at the time of publication.
This is not DSM and Haixing’s first partnership. The duo has already collaborated on a 60%/40% joint venture in DSM Zhongken Biotechnology (DZK), located in Tongxiang, Zhejiang province, China.
Personal care evolution
Hydrocolloids are extracted from plants and seaweeds and are a common feature in cosmetics and personal care products. Concentrating on the personal care market, DSM and Haixing hope to meet growing demand for gellan gum, along with expanding its product portfolio with xanthan gum and welan gum.
The companies hope that its alliance will also help to advance its texture and blending solutions development capabilities.
“By acquiring Rainbow, we will be even better positioned to deliver unique, high-value solutions to our food, beverage and personal care customers worldwide,” added Xiangwei Gong, President of DSM Hydrocolloids.
Market potential
With the global hydrocolloids market size projected to grow from $6 bn (€5.03 bn) to over $7.5 bn (€6.3 bn) by 2020, and with urbanisation, clean labelling and a focus on health, the affiliates believe the market has “excellent growth opportunities”.
“This is an important strategic investment, which expands both our manufacturing capacity and innovation competencies, enabling us to deliver on our strategy to become a leading and fast-growing global natural hydrocolloids producer,” outlined Dr. Weiming Jiang, DSM China President.
Looking at the benefits of the company’s strategic location, Jiang went on to say: “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.”
While “DRB will work closely with DZK where DSM has also built a world-class innovation centre”, which 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”, Gong shared.
Commenting on their long-term relationship, which first commenced in 2010, Rongming Wu, Chairman of Haixing, emphasised: “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.”