No artificial yarn, whether rayon, acetate or nylon, has ever been produced from a Chinese factory. The Russians promised to give a viscose filament plant to the Chinese Communists under the Red "first five-year plan," but so far nothing had been heard from the mainland indicating that the Russians had kept their promise.
Several things mark out the Toufeng plant from being just another new factory in Taiwan. It will, for one thing, begin a new era in the history of a country which first invented silk 4,500 years ago. Legend had it that Lei Tsu, wife of Emperor Huang Ti, discovered the silkworms on mulberry trees and taught her people how to obtain silk from cocoons, laying the foundation for forty centuries of Chinese sericulture industry. Silk has long given way to rayon yarn in the world textile market. And it is only appropriate that an artist's version of the portrait of Lei Tsu should now adorn the first rayon yarn produced in China.
The NT$160,000,000 Toufeng plant of the China Artificial Fiber Company, Limited, is privately owned. It testifies to the belief of the Chinese government in the future of free economy and private enterprise. It also signifies the combination of Chinese initiative, American technical assistance and economic aid. It is one of the first factories in Taiwan to have direct foreign capital participation, and it draws its investment from four groups of people: industrialists from the mainland, native investors in the town of Toufeng, overseas Chinese in the United States, and a private American corporation.
The sprawling, brand new factory covering an area of 37 acres, will be able to produce five tons of rayon filament yarn of 150 denier daily, or 3,960,000 lbs. per annum. As Taiwan has been buying some four million pounds of rayon yarn from abroad each year, mostly from Japan, Italy and West Germany, the island will be almost self-sufficient in viscose filament next year.
Estimated conservatively, the 3,960,000 lbs. of rayon yarn will be worth US$2,296,800. The plant will also recover 3,600 tons of Glauber's salt in the process each year, useful to Taiwan's glass and paper industries and worth another US$72,000. The two make a total of US$2,368,800. On the other side of the ledger, import for raw materials mainly chemical rayon pulp, and payment for equipment maintenance will cost US$1,070,878. Total savings in foreign exchange will therefore be US$1,297,922 each year.
The savings will be much bigger after 1958 when the Taiwan Pulp and Paper Corporation opens its new chemical pulp mill at Hsinying for production of chemical rayon pulp from bagasse, a by-product of the sugar mills. Laboratory experiments have already succeeded in making the pulp through the sulphate process, and a pilot plant is being put up to test production on an industrial scale. After 1958, practically all raw materials for the rayon plant will be available locally.
From an economic point of view, the Toufeng project means more than savings of a few million dollars in foreign exchange each year. Free China had a population of over ten million by last count, and there simply isn't anything available locally to clothe them. Over 90 percent of the cotton used by local textile mills are imported from abroad. Planting of cotton was introduced only in the last few years, and the congested population rate of 650 persons per square kilometer of utilized land left little hope for developing it into one of the main crops of the island, after sugar and rice. And if a war breaks out and Taiwan is cut off from the outside world, all textile mills on the island will have to be shut down.
Artificial fiber seems to be the only answer to that possibility. The amount of viscose filament yarn to be turned out by the China Artificial Fiber Company annually is roughly equivalent to 10,000 bales of 44-count cotton yarn, or 22,000 bales of 20-count cotton yarn. To spin that much yarn, the island would have to import some US$3,600,000 of raw cotton each year.
Compared to these savings, the total initial investment of the company would seem to be a real bargain. Excluding interest during construction and partial payment for the cost of machinery, which would be made over a period of three years on an installment basis, it came to only NT$92,000,000, or US$5,800,000 at the official rate of exchange.
The idea of a viscose filament plant was first conceived three years ago by economic planners of the Chinese government, who foresaw the need for raw material in clothing the people.
In July 1954, the government, represented by the Central Trust of China, signed a contract with the Van Kohorn International Corporation of New York. The American company, which helped to put up viscose filament plants in Yugoslavia, India and many other countries, undertook to supply essential imported equipment and technical services for a total of US$4,424,000. The sum was later increased by another US$68,100.
Even after the signing of the contract, the government had no intention of starting the rayon plant as a state enterprise. It then took the unprecedented step of advertising for private capital, to finance the plant. "Wanted," the advertisement on Taipei's Central Daily News on July 3, 1954, said, "private capital to invest in a viscose rayon plant. Applicant must be able to put up NT$40,000,000 for at least two years before production can begin. Please contact the Central Trust of China on July 14 and 15."
Although the amount is only a little more than two and a half million United States dollars, it still means a lot of money in Taiwan. Two industrialists showed up at the Central Trust of China on the appointed dates. One was never heard from again after his initial appearance. And the second man got the right to succeed to all rights and obligations on the part of the Central Trust of China in its contract with Van Kohorn.
He is Shih Feng-hsiang, who lost his left arm some thirty years ago while setting up the machinery for his first spinning and weaving mill in Hankow. In the years in between, Mr. Shih built more cotton mills in northwest China, and dabbled in other light industries such as match and cigarette making. When the Communists took over the Chinese mainland, he brought some of his spare spindles to Taiwan and founded the Ta Ching Textile Company. It has grown into one of the leading cotton mills in Free China.
Mr. Shih talked his friends into putting up the money. The trouble was, he recalled, that the original government estimate of' NT$40,000,000 in initial investment proved to be far from adequate. There were some delays in the delivery of the machinery and building costs climbed sharply because of the construction boom in Taiwan. The Toufeng plant used 9,000 tons of Portland cement and 3,800 tons of lumber, not to mention structural steel, bricks and other materials. The finished plant cost a total of NT$92,000,000, more than double the estimate made two years ago.
The money came from four groups of investors. There are industrialists from the Chinese mainland, including Mr. Shih, elected chairman of the board of directors of the new company. And there are industrialists born in Taiwan and leading citizens of Toufeng, such as Lai Ching-tien, board chairman of the Wun Hao Dyeing and Weaving Mill, and Lin Wei-kung, assistant general manager of the Land Bank of Taiwan. Mr. Lai is now general manager of the China Artificial Fiber Company. Then there are a group of overseas Chinese in the United States, and lastly, the Van Kohorn Corporation.
The Van Kohorn deal, arranged by the government, makes the China Artificial fiber Company the first private enterprise in Taiwan with foreign investment. The New York company agreed to invest UT$250,000, or NT$3,912,500 after conversion, in the viscose filament plant. This sum is deducted from the US$4,492,100 of essential equipment and technical services supplied by Van Kohorn, with the balance repayable over a period of three years from 1957 to 1959.
The Van Kohorn Corporation need not worry about its investment. The Chinese company has already paid US$1,600,000 of the cost of machinery. It agrees also that no dividend or bonus will be distributed to shareholders until all payments owed the Van Kohorn Corporation shall have been paid in full. The plant confidently expects to clear some NT$23,400,000 in the first year of its operation, and NT$38,000,000 each in the following two years. The estimated profit is made possible by the new Income Tax Law exempting new factories from paying income tax in the first three years of its operation.
The China Artificial Fiber Company also received help from both the Chinese and United States governments. The International Cooperation Administration's Mutual Security Mission to China approved a NT$20,000,000 loan to the plant from proceeds of the sale of agricultural surpluses in Taiwan, repayable over a period of two years. The Chinese government, besides granting short-term loans when construction was in progress, lent it NT$12,000,000. Together with the NT$60,000,000 put by shareholders, they make up the total of NT$92,000,000.
When it came to choosing the site, Toufeng easily won the bid with three native sons sitting in the meeting of the board of directors. The town, under the administration of Miaoli hsien, meets other qualifications as well. Easily accessible by both railroad and paved highway, it is only 80 miles from Taipei. The location is important because in full operation, the plant will consume 5,000 tons of water daily, and use up 12,000 tons of coal and 17,424,000 Kilowatt-hours of electricity each year.
The town fathers fully appreciate the opportunities given the development of their fawn by the new factory. They helped in securing the plant site, and when the deed was signed, voted to pay 20 percent of the NT$1,400,000 that was the cost of the land. The goodwill investment paid off handsomely. Since construction began in July 1955, hundreds of townspeople were employed as unskilled laborers by builders and contractors. The completed plant will give employment to at least 700 local workers in three shifts, plus a staff of 80 engineers and administrative personnel.
The factory buildings were designed by Kuan Sung-sheng, noted Chinese architect who built the Park Hotel of Shanghai and, most recently, the Taipei Stadium. The Van Kohorn International Corporation supplied building requirements and sent a team of expects, headed by Dr. Joseph L. Costa, its vice president for technical services, to Taiwan. The man who supervised construction work and the installing of machinery is Lew Feng-chang, who will actually run the first Chinese rayon plant as factory manager.
The main building is probably the largest single factory building in Taiwan, though scores of other plants are much larger in total area than the China Artificial Fiber Company. The four-story building stands 623 feet by 229 feet at farthest points, and measures 309,600 square feet. Connected with a giant fume stack 250 feet away by underground exhaust ducts, the main process building houses the viscose preparation, viscose ripening, spinbath, spinning, aftertreating, coning and reeling departments.
Eighty percent of the main process building are air-conditioned since a constant temperature must be maintained for the filament to congeal. In certain rooms, as the viscose ripening department, the temperature has to remain 17° Centigrade all year round. Two freezers supplied by Van Kohorn have capacities equivalent to an ice factory turning 700 tons of ice per hour. An air washer room washes the air that ventilates the building. Dirty air escapes through the exhaust duct, the walls of which are treated to make them acid resistant.
In addition to the main process building, there are a carbon disulphide plant, a three-story water treatment plant with coagulator which supplies four different kinds of water, a 110-ton water tower, a power plant with boiler room, a transformer station, storehouses and a fuel storage area. There are temporary caustic soda dissolvers and temporary sulphuric acid tanks, as the plant uses 1,890 tons of caustic soda and 3,050 tons of sulphuric acid per annum. Two railway tracks lead into the factory, one in front and the other in rear of the main building.
With only the finishing touches left in construction, and full production about to begin, the owners of the private company are looking far ahead of the present. What is foremost in their mind is not the manufacturing of five tons of viscose filament yarn every day, of which they feel assured, but how to expand that capacity to ten or even twenty tons. "With slight" alteration and addition, we shall be able to turn out staple fibers and cellophan," said Lew, the factory manager, "but we are aiming higher than that. The entire plant was so designed that we would have plenty of room for expansion. Take the spinning department as an example: it has enough space for a daily production of twenty tons instead of five. We are definitely going to expand, and very soon too."