Summary of Key Points
The newly introduced state-owned assets and state-owned enterprise (SOE) reform plan for 2026 explicitly calls for the concentration of state capital in new materials and national security sectors, as well as the establishment of a long-term research and development (R&D) framework to overcome “bottleneck” technologies. Zhejiang’s established SOE, Juhua Co., Ltd., has undergone two transformative periods that determined its survival: from producing fertilizers to general chemicals, and then to high-end fluorine materials. It has become a global leader in the fluorine chemical industry. Its independently developed ultra-pure PFA (a critical component for semiconductors) is now produced in tens of thousands of tons, breaking foreign monopolies and solving a major challenge in domestic chip manufacturing. Juhua’s strategy also includes investing in high-end materials such as data center cooling fluids, aligning perfectly with the reform objectives and providing a replicable model for other SOEs to transform and achieve industrial autonomy.
Detailed Analysis
1. From Fertilizer Factory to Global Leader: Juhua’s Two Transformations
Juhua began its journey in 1958 with the establishment of a fertilizer factory in Quzhou. Over the past six decades, it has completed two transformative shifts that were crucial for its survival:
- First Transformation (1970s): It shifted from focusing solely on fertilizers to general chemicals, reducing its dependence on this sector.
- Second Transformation (1990s): It expanded into the entire fluorine chemical industry chain, establishing a unique domestic closed-loop system that includes fluorite, hydrofluoric acid, basic fluorine products, and high-end fluoropolymers, thereby ending its reliance on imported raw materials and processes.
Today, Juhua has a market value of over 100 billion yuan and owns two core domestically produced alternatives: ultra-pure PFA for semiconductors and data center cooling fluids, making it a global leader in the fluorine chemical industry.
It is worth noting that Juhua has preserved its old factories and offices. These “industrial memories” reflect its commitment to staying innovative and resilient, always focusing on new materials and ensuring the security of its industrial chain. By actively phasing out low-end production capacity and concentrating resources on high-end technologies, Juhua was able to make breakthroughs in ultra-pure PFA.
2. Ultra-Pure PFA: The “Vascular Material” for Semiconductors – How Difficult is it to Break Foreign Monopolies?
Ultra-pure PFA is a critical material used in chip manufacturing, involved in all stages of wafer cleaning, etching, and chemical storage and transportation. It requires impurities to be controlled at the PPT (part per trillion) level, which is millions of times stricter than for ordinary high-end materials; even trace amounts of impurities can render entire batches of wafers unusable.
In the past, the global market for ultra-pure PFA was dominated by foreign giants such as Chemours and Daikin:
- Quotas: Customers had to place orders 12–18 months in advance and pay large upfront fees, yet they still couldn’t secure production capacity.
- Discriminatory Pricing: The same fluororubber product was sold for 60,000 yuan/kg in China and only 15,000 yuan in neighboring countries.
- Technical Barriers: PFA for advanced 5nm and 2nm manufacturing processes was directly prohibited from being supplied to China.
After a decade of research and development, Juhua has achieved mass production at the tens-of-thousands-of-ton level:
- Its product purity is even higher than imported versions (2 PPT vs. 5 PPT abroad).
- The delivery time has been significantly reduced, eliminating the need for a year-and-a-half wait.
- It has completely eliminated China’s dependence on imported high-purity fluorine materials for 12-inch wafer factories, providing a secure foundation for the chip industry.
3. SOEs Are Not Inflexible: Juhua’s Approach of “Marketization + Long-Term R&D”
Many believe that SOEs are inflexible, but Juhua is the exception:
- Market-Oriented Management: Its management and R&D teams are closely involved in production, and international peers do not consider it an inefficient SOE.
- No Focus on Short-Term Profits: It avoids competing in low-end markets and invests resources in high-end technologies with a ten-year development cycle.
- Alignment with Reform Goals: Juhua’s approach aligns with the 2026 reform plan, which emphasizes long-term R&D and error-tolerant incentives. For example, the development of ultra-pure PFA involved thousands of experiments, requiring a high tolerance for failure without a proper error-tolerance mechanism.
Provincial authorities have also provided significant support, helping Juhua overcome technical barriers. This has enabled it to serve not only local wafer and computing companies in Zhejiang but also to mitigate supply risks for the entire national chip industry.
4. From “Low-Price Competition” to “Supply Chain Security”: The Impact of Domestic Alternatives
The fluorine chemical industry used to be characterized by homogeneous low-end capacity, with companies competing on price and earning meager profits. However, the situation has changed:
- Upgraded Procurement Logic: Leading domestic companies (such as chip manufacturers) now prioritize supply chain security, as foreign disruptions can halt the entire industry.
- High-End Materials as New Growth Drivers: High-value materials like ultra-pure PFA have opened up new growth opportunities, enabling China’s fluorine chemical industry to move from the lower end of the global value chain to the upper end.
- Industry Transformation: Juhua’s breakthroughs have inspired other domestic companies to shift away from simply replicating existing technologies and focus on developing “bottleneck” materials.
For example, in the data center cooling fluid sector, Juhua was one of the first in China to develop new liquid cooling products tailored for AI models, aligning with the reform plan’s emphasis on emerging industries like AI and new materials.
5. The Next Five Years: China’s Fluorine Chemical Industry Aim to Dominate Five Global High-End Areas
Juhua’s goal is clear: over the next five years, it aims to lead China’s fluorine chemical industry in dominating five key global high-end areas:
1. Ultra-pure semiconductor fluorine materials (already achieved).
2. High-end fluororubbers.
3. Electronic specialty gases.
4. Data center fluorinated fluids.
5. New energy fluorine membranes.
These areas are heavily monopolized by foreign companies, but Juhua is confident of success due to the critical nature of its advanced technologies (such as purification, polymerization, and clean production processes). These skills cannot be replicated easily, and Juhua’s decades of practical experience give it a competitive advantage.
By capturing these high-end areas, China’s fluorine chemical industry will reshape the global landscape, moving from being a follower to a leader.
Conclusion
Juhua’s story illustrates how SOEs can transform and become key players in solving “bottleneck” issues. By focusing on marketization and long-term R&D, they can become a vital force in overcoming challenges and gaining a place in the global competitive landscape. The 2026 state-owned assets reform plan aims to support such enterprises, allowing them to focus more on developing high-end technologies and ensuring the security of the national industrial chain.