US$1.4b expansion for joint Sinopec-BASF project
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On the outskirts of Nanjing, capital of Jiangsu province, a joint project between China's largest refiner Sinopec and German chemical company BASF is undergoing a new round of expansion. A total of $1.4 billion has been budgeted for the expansion, making it the leading chemical production site in China.
The move conforms with China's stimulus plan for the petrochemical industry, said Johnny Kwan, board chairman of BASF Greater China. "It underscores our strong belief in the growth opportunities of the Chinese market and is another milestone in cooperative development."
After the expansion the joint venture, BASF-YPC Co Ltd (BYC), will be able to produce specialty chemicals serving multiple industries such as construction, electronics, pharmaceuticals and automotive, said Kwan. "We will be able to help our customers in China make their industries, businesses and homes more energy efficient."
BASF and Sinopec started their expansion at BYC last September. BYC, a 50-50 joint venture founded in 2000, had a total investment of $2.9 billion in its first phase. It is also BASF's largest single investment overseas.
The development will facilitate BASF to better serve Chinese customers, said Kwan. Paying close attention to domestic customers is one important strategy the company has used to face the tough economic situation last year, he added.
"We provide not only products but also full solutions to our customers. In supporting their plans for energy efficiency and pollution control, we forge closer ties with them," said Kwan.
Another key strategy BASF has used to face the financial crisis is to put a strong focus on targeted industries, such as the automotive and construction sectors.
In the automotive industry, BASF has been working directly with different brands and manufacturers to offer them better solutions. The company also developed tailor-made products for the Chinese market, he said.
In the construction sector, the company has worked with domestic partners to help them achieve goals in energy conservation, he added.
"It is true that we are affected by the economic situation, but I was happy to see that we finished the year of 2009 having fulfilled the tasks set out in our business strategies," said Kwan.
Last year sales of BASF worldwide declined by 19 percent to 50.7 billion euros. All segments posted lower sales with the exception of performance products and agricultural solutions, the company said in a statement in February.
The company expects to see a significant rise in earnings in 2010, as the fourth quarter of 2009 was encouraging and offers grounds for confidence, said the statement.
Kwan said he was generally optimistic about this year, although uncertainties still exist. The company would pursue its strategies this year, he said. It would also take advantage of synergies brought by the acquisition of Ciba to achieve further growth.
BASF last year agreed to buy Swiss chemical company Ciba in a transaction valued at 6.1 billion Swiss francs ($5.5 billion). The integration is going well at present, said Kwan.
In January BASF signed a cooperation agreement with one pavilion of the Shanghai Expo 2010 to make it an ecological building. With the use of the company's products the venue will use no active heating and cooling system.
The pavilion, called Hamburg House, is part of the German complex for the expo. Through optimization of the architectural design and advanced energy technology, the building can maintain a constant indoor temperature at 25oC all year around without consuming any electricity from the grid and without the use of air-conditioners or heaters.
"Through this construction demo, we hope to show how advanced concepts and technologies can be applied in China to realize a better quality of life and promote a culture of sustainable building," said Kwan.
The chemical industry, which provides raw materials to many downstream sectors, will play an important role in China's efforts in building an environmentally friendly economy, he added.
Commenting on the petrochemical stimulus plan China approved last year, Kwan reiterated the importance of technology upgrades, saying it would be a growth engine for the industry in the future.
The industry should also put more focus on medium and small companies. The should be instrumental in helping those companies to execute their good ideas, he added.
China is now developing its chemical industry fully in the right direction, said Kwan, adding that what he was longing to see was more depth in some areas.
For instance, the development of chemical industry parks should be given more attention. Such parks will help companies to manage their production and waste treatment "in a more focused way".
As a global chemical giant, BASF can share some of its past experiences with domestic companies in the area, he added.
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