Increasing competition on international plastics markets and the rising cost of labour in Japan are forcing companies there to take the same route towards joint ventures and strategic alliances the market is currently seeing in Europe.

Following the announcement in late November 1995 of plans by Mitsubishi Chemical Corp and Tonen Chemical Corp to merge their interests in polyethylene and polypropylene. Into a new joint venture with capacities for 906,000 t/y of PE and 645,000 t/y of PP, a second mega merger was announced in early January. Three chemical groups, Mitsui Toatsu Chemicals Inc, Tosoh Corp and Denki Kagaku Kogyo KK, plan to merge their PVC production activities, creating a new giant with 580,000 t/y of capacity and Yen 50bn in annual sales.

With anticipated first-year sales of Yen 170bn, the polyolefins jv would control 25% of the Japanese market and move into fifth place among international manufacturers of PP and twelfth among PE players. Largest of its type in Japan, the new PVC company is scheduled to start business on 1 April as Taiyo Vinyl Corp. Tosoh and Mitsui Toatsu each will contribute Yen 370m of the Yen 1 bn equity, with Denki Kagaku Kogyo putting up the remainder. Since 1993, the number of players in the Japanese polyolefins market has shrunk to 8 from 17. The industry expects the process of concentration to continue.