Clariant expands in China

By Wang Ying (chinadaily.com.cn)
Updated: 2009-11-29 14:22

Dedicated in exploring its China market, Clariant, a Swiss-based chemical company, announced today that it will start construction of the plant at Daya Bay of Guangdong province in the wake of the operation of its surfactants production facility in Zhenjiang of Jiangsu province in eastern China.

The move is in stark contrast of many multinational corporations which are narrowing down their overseas branches due to the financial crisis.

The new plant at Daya Bay, which is expected to be operational in early 2011, will produce ethylene oxide derivates that are used in many applications ranging from crop protection to metalworking and construction chemicals.

"It will enable Clariant to meet increasing demand from the Chinese and wider Asian markets," said Hariolf Kottmann, chief executive officer with Clariant.

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Kottmann said the project in Guangdong province is part of the company’s development strategy in China, which also includes a recently completed project at Zhenjiang in Jiangsu province.

The Zhenjiang plant is designed to meet China's growing demand for surfactants from various sectors such as personal care, paints and coatings as well as metal working industries. Other products available at the plant include chemicals for textile, oil, mining and home care segments.

As a major city along the Yangtze River, Zhenjiang is strategically situated between Nanjing and Shanghai, reaching Clariant’s key customers in the region. This facility complements its already well-established manufacturing capabilities in China.

The Zhenjiang plant takes about one third of the $1 million investment Clariant has made in China during the last 18 months, said Kottmann.

Clariant's sales amounted to 8.1 billion Swiss Francs last year with a share of approximately 45 percent from Europe, 30 percent from America, 25 percent from Asia-Pacific region, but only 4 percent from China.

"We look upon China as our most important market and we are committed to expanding our presence in China from our current 13 locations," he said.

Like many chemical producers such as BASF and DOW, which have moved their Asian headquarters to Shanghai for fast expansion, Clariant which bases its Asian regional headquarters in Hong Kong is also considering a similar transfer.

"The growing call for expanding the Chinese mainland market is very likely to prompt the Swiss chemical maker to move its regional headquarters to Shanghai," Knottmann said. According to him, Clariant has also planned to shift some of its production lines to China from Europe and North America.

"We look upon our current activities in China as one of the most important platforms for our future growth," said Knottmann.

China has already become the world’s second largest consumer of chemical products. And, some experts predict that within a few decades China will produce more chemicals in absolute terms than today’s biggest market in Europe and the US.

The demand for specialty chemicals in China is growing rapidly as Chinese manufacturers continue to move up the value chain to meet the domestic and export demand. The current economic crisis has also illustrated how well China has been doing in developing a strong domestic economy to enable it to grow despite the global economic crisis.

Chemical insiders said this has been further supported by the Government's recent stimulus package. As a result, growth rates for construction chemicals, plastic addictives, and engineering plastics are all predicted to exceed 10 percent annually. And specialty chemicals will see an about 20 percent annual increase rate over the next five years.

"Clariant is eager to be part of this growth as these are its strong areas," said Knottmann.

Clariant has continually grown its presence in China since the company was formed in 1995. With years of client cultivation and localization, the fine chemical company has now a total of 9 manufacturing facilities, 6 technical centers and over 10 sales offices in more than 13 cities across China, employing over 1,300 local people.