Henkel banking on strong demand in China in coming years

Henkel, the German industrial and consumer goods manufacturer, will continue to invest and support its partners in China in the coming years, as part of its efforts to bank on the country's strong demand from food packaging, home improvement to automotive and consumer electronics, said a senior executive.

The company announced one of its biggest investments in China of about 500 million yuan ($78.35 million) late last month, to expand its adhesive technologies innovation center in the high-tech industry cluster in Zhangjiang, Shanghai.

The facility is expected to transform Henkel's current Zhangjiang site into an innovation center for both China and the Asia-Pacific region, and reinforce the position of Henkel's adhesive technologies to serve a variety of industries and develop advanced adhesives, sealants and functional coatings solutions for customers in the region.

"We anticipate China to contribute significantly to our global growth with the economy transitioning from a high-speed model to a high-quality model," said Rajat Agarwal, president of Henkel China.

The executive said this will bring more opportunities to Henkel as its strategic framework that focuses on enhancing innovation, sustainability and digitalization capabilities aligns fairly well with the nation's growth agenda.

"With digital transformation and focus on sustainability and high-quality growth, we anticipate big advances in sectors such as e-mobility, automation, artificial intelligence, e-commerce and 5G technology in which Henkel can contribute through our innovation, leading technologies and brands," he added.

"In consumer businesses, we see great opportunities as China is boosting consumption through the dual circulation development paradigm that emphasizes the mutual reinforcement of domestic and international markets," he said, noting the company is keen to further understand its consumers through data analytics and its strengthened partnerships with Chinese digital giants.

China has become a crucial part of the global operations of many European multinational companies, with a majority of them reporting higher gross margins last year in the country than in other parts of the world, according to a business confidence survey released by the European Union Chamber of Commerce in China, earlier this week.

The study found that nearly a third of all the European manufacturers said they would onshore their supply chains to China, five times the number that are offshoring.

European companies continue to see business opportunities in China not only in areas such as fast growth in domestic consumption, but also in new areas such as the country's leading-edge adoption of new digital technologies, said Sun Fuquan, vice-president of the Beijing-based Chinese Academy of Science and Technology for Development.

Henkel reported sales of more than 19 billion euros ($23.17 billion) and adjusted operating profit of about 2.6 billion euros in 2020. The group employs 53,000 people globally.