The two partners have established a 50-50 joint venture, Global Bio-chem-Cargill (Holdings) Ltd., in Hong Kong to supervise and manage the new plant.

The Shanghai refinery, whose annual capacity is estimated to be 100,000 metric tons of high fructose corn syrup, or HFCS, is scheduled to start operation in mid-2002, Global Bio-chem said in a statement.

The company didn't reveal the total investment in the plant, but Bloomberg News reported that it was HK$80 million (US$10.3 million). Global Bio-chem will supply corn starch for manufacturing to the refinery.

Cargill, a major supplier of HFCS for the global food and beverage industry, will provide technical support, sales, marketing and after-sale services. HFCS is used as a sweetener in baked food, cookies, candies and soft drinks.

Fructose is about 75 percent sweeter than sucrose, therefore its products are frequently used to substitute sucrose.

Yet only a small number of refineries in China, one of the world's largest corn producers, are producing corn syrup.

"Apart from their limited technology in making syrup, these companies think by-products from primary corn processing, such as corn oil and feedstuff, are profitable enough for them," said Zheng Qi, a China Securities analyst.

Feng Fusheng, deputy secretary-general of the Shanghai Sugar Products Association, said domestic production of syrup is enough to "fully satisfy" appetite in China's food industry.

However, Pat Bowe, president of Cargill's North American sweeteners business, said last month that the company is optimistic about the HFCS market and potential for other bio-processing products in the country.

"After many years of studying the Chinese market, Cargill is excited to ally with Global Bio-chem, a key corn wet-milling company in China," he said. Following the announcement, Global Bio-chem's share price in Hong Kong advanced 3.5 percent on Tuesday to HK$2.05 and settled slightly higher at HK$2.075 yesterday.

(eastday.com 09/27/2001)