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ChemChina looks to hi-tech acquisition as way forward
By Zhao Hua
Updated: 2009-03-17 16:52
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Business restructure
Ren believes that energy-efficient and environmentally friendly products will become ever more important to the world. In light of this, this is where ChemChina will focus in the next decade.
"We are committed to a long-term strategy of developing new materials and specialty chemical products," he said.
As part of this policy, ChemChina has already consolidated its business into six units - advanced chemical materials and specialty chemicals, oil processing and refining products, chlor-alkali chemicals, agrochemicals, rubber products and chemical equipment.
This business restructure is in line with the development of China's chemical industry. Ren said: "Now China has become the world's largest chemicals producer. However, in the high-tech sector of the industry, the country still lags far behind the developed countries."
Ren's plan for each unit is the same - he wants to see them established as the largest of their kind in China and one of the world's top three. The company is also planning to consolidate these six units into three or less in the future, he said.
Overseas development
Overseas development has always been a key philosophy for ChemChina. The company now has four overseas subsidiaries.
In 2006, the company's subsidiary China National Bluestar Group Corp (Bluestar) acquired the France-based Adisseo Group, a leading global animal nutrition feed firm specializing in the production of methionine, vitamins and biological enzymes. The deal has boosted ChemChina's methionine production capacity, making it now the world's second largest producer.
In the same year, Bluestar bought the French company, Rhodia's, organic silicon business, including its patents, manufacturing equipment and distribution channels, as well as the company's sulfide business. The acquisition has also raised Bluestar's organic silicon business to the number one position in the world.
"The two deals clearly identify our business focus as being a leading company in the new materials and specialty chemical products sector," said Ren.
Last October ChemChina completed a stake transfer with the Blackstone Group - which saw the US private equity company pay $600 million for a 20 percent share in Bluestar.
Ren said: "The deal can help Bluestar improve its technology and management levels, which will make the company ever more multinational."
"In order to achieve overseas development, a company has many options. For example, it can form cooperation agreements with foreign companies, it can also open plants overseas
"For our company, I think the best choice is to make acquisitions. Through mergers and acquisitions we can have access to larger markets and more advanced technology. It is also a valuable route for bringing new talent into the business."
