Lanxess hopes to cash in on urbanization

SHANGHAI - German specialty chemicals company Lanxess launched a new production unit for high-quality black iron oxide pigments on Thursday in Shanghai in a bid to capitalize on China's rapid urbanization.

The site, located in the outskirts of Jinshan district, has a designed annual production capacity of 10,000 tons.

Lanxess, whose chemicals are widely used in the construction industry and the paint and coating sectors, is eyeing the growing market both in China and other major Asia-Pacific markets, including Australia and India.

"China offers a great opportunity because of the mega trend of urbanization and the pursuit of a high-quality life in the country," said Lanxess China Chief Executive Officer Martin Kraemer.

For instance, the scale and pace of China's urbanization promises to continue at an unprecedented rate and, if current trends continue, China's urban population will expand from 572 million in 2005 to 926 million in 2025 and hit the 1 billion mark by 2030, according to a McKinsey report.

People with a higher standard of living also tend to have higher requirements with regard to the buildings they live in.

"Buildings must be nice to look at. Nobody wants to have one gray building after another," Kraemer said.

The German firm acquired the manufacturing site in Jinshan in 2008, and has so far invested 70 million yuan ($10.52 million) in the project.

Lanxess, which produces plastics, rubber and specialty chemicals, has turned from a loss-making company to a highly profitable enterprise since it was spun off from German chemical and pharmaceutical company Bayer AG in 2004.

It runs 13 business units in China, such as synthetic rubber and high-tech plastics - key materials in tires and auto parts. These are the strongest growth drivers of Lanxess' business in both China and around the globe.

Kraemer said his company is relying on both organic and external growth for its business development in China.

The company generated year-on-year growth of 58 percent in China in the first six months this year. It achieved global sales of 5.06 billion euros ($7.10 billion) last year.

China Daily

(China Daily 10/22/2010 page14)