Good chemistry

A Lanxess chemical manufacturing facility in Singapore

Lanxess, a German chemical company, is looking for a successful new beginning in China.

Separated from the powerhouse chemical and pharmaceutical company Bayer three years ago, the Germany-based company already seen China develop into its strongest market in Asia.

Its most important strategic objectives in China are exploiting the opportunities and expanding its market position, says Wang Yongli, president of Lanxess China.

Worldwide, the company has seen rapid growth by "reducing internal costs, restructuring its loss-making businesses and adjusting its portfolio and acquisitions", says Wang.

"The Chinese chemicals market now has the world's largest growth potential. We are also looking at some acquisition opportunities here," he says.

"In the past three years we have steadily increased our investment in China and will continue to do so to develop the market further," Wang adds.

The company's latest investment is a joint venture in the city of Tongling, which is near the Yangtze River in the province of Anhui, about 500 km west of Shanghai.

The Tongling plant will produce an antioxidant for rubber, thus making Lanxess one of the first foreign suppliers to manufacture the chemical in China. The plant started production in August 2007 and had its first commercial sale in September 2007.

Apart from the Tongling plant other investments of Lanxess in China include: an inorganic pigments project in Shanghai, a semi-crystalline products and leather chemical project in Wuxi, and a hydrazine hydrate project in Weifang.

These investments underline the immense strategic importance of the Chinese market for the company's business strategy.

"In fiscal 2006 our sales in China grew by double digits to around 330 million euros. This accounts for almost 27 percent of our Asia sales," says Wang.

Lanxess is also strengthening its research and development (R&D) in China to better equip to the demands. It has a technology center for the development of industrial rubber in Shanghai. It also runs the largest R&D center in China for leather products in Wuxi. "China is becoming more and more important to us as a technology location," says Wang.

Rubber business

Lanxess recently announced the biggest single investment in its history to be located in Singapore where it has earmarked 400 million euros to build a production site for synthetic rubber manufacturing.

From 2011, the Singapore plant will produce up to 100,000 tons of butyl rubber annually, making the project the largest facility of its type in Asia. Construction is due to begin in the first quarter of 2009 and will be completed by the end of 2010.

The new chemical facility will produce butyl and halobutyl, synthetic rubbers that are used for tires.

Market analyses said that the global market for butyl rubber would rise steadily in the coming years. Growth is most pronounced in China, where it corresponds to 6 percent annually.

"With the new capacities, we will consolidate the good market position we already occupy," says Axel Heitmann, chairman of the Lanxess management board.

"In 2004, we sold approximately 31 percent of our butyl rubber products in the Asia Pacific region. In 2007 we sold around 40 percent of our products here," he says.

In China, Lanxess is building its R&D center for rubber research in Qingdao. "With this investment, we hope to underline how important the Asian rubber market is to us," Wang says.

The company's plans for the new research facility call for an investment of several million euros. Work at the center will focus on developing new products and applications and continuing the development of existing products.

"Qingdao is the ideal location for a research center in this field because around 80 percent of Chinese rubber engineers study at the university there," says Wang. "Moreover, around 60 percent of the Chinese rubber industry is located in and around this city, which has a population of some seven million."

(China Daily 03/17/2008 page5)