BASF aims to invest more than €1bn ($1.3bn) in additional plants in China in the next few years, as the world’s largest chemicals maker by sales eyes expansion in the rapidly growing region where its factories are running at full steam.
The German chemicals maker will invest “€2bn-plus” into its 100 Asian sites by 2014, at least half of which will flow into China, Martin Brudermüller, executive board member and head of BASF’s Asia-Pacific operations said.
“We are certainly in discussions about building new plants in Asia. If you want to keep the growth pace you have to invest,” said Mr Brudermüller, the Hong Kong-based manager who next year will become deputy chief executive. “We build up capacity where our markets are.”
Asia made up 23 per cent of BASF’s €39.6bn chemical sales in the first nine months of this year. By 2020, the group expects to generate €20bn of its forecast €92bn of revenues from the region. About half of its Asian sales come from China.
Jürgen Hambrecht, BASF’s outgoing chief executive, recently lifted the group’s profit forecast on the back of rapidly growing sales in China and the US in particular.
Mr Brudermüller said he remained bullish on market growth in China and other Asian regions.
“If we are looking at our product volume in Asia, we should see further growth in 2011, although it could maybe be a bit slower than this year.
“Our long-term goal for Asia is to grow 2 percentage points above the market. I am confident that we will manage to outpace market growth in 2011 as well.”
The group has invested €3.5bn in its third-largest global market in the past 20 years – more than a fifth of overall German direct investment into the Middle Kingdom.
The chemicals maker is currently spending $1.4bn on expanding its Nanjing site with the help of one of its joint venture partners, Sinopec.
It is also planning to build a new plant in Chongqing, where it is still in the middle of a lengthy regulatory approval process. Mr Brudermüller said he expected to receive a go-ahead from authorities very soon.
Mr Brudermüller, who lost out this year against chief financial officer Kurt Bock in the race to become chief executive, warned of a shortage of highly skilled labour in Asia.
“The Asian labour markets and particularly the Chinese one are very hot,” he said.
“It is a tough fight there and you have to invest a lot of resources to appeal to and attract the people you want.”
He said BASF wanted to add another 5,000 people to its 15,000-strong Asian workforce in the next decade, about half of which would be hired in China.
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