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BASF Plans Major Presence in Asia Pacific

Thursday, October 8, 2009

In the past week, BASF (Ludwigshafen, Germany) outlined its Strategy 2020 for Asia Pacific, a strategy that the company will use to increase its growth by an average of two percentage points faster than the regional Asia Pacific chemical market each year through 2020. With an already expected regional market growth of 4-5% per year, BASF’s plan would double regional sales while earning a premium on cost of capital.

BASF plans to invest $2.95 billion (€2 billion) between 2009 and 2013 in the Asia Pacific region in order to produce 70% of BASF’s total sales there. This includes the company’s 50% share of the $1.4 billion expansion of its integrated chemical production joint venture in Nanjing, China. BASF is also in the planning phase for a 400,000-ton per year plant in Chongqing, China, for MDI, a precursor for polyurethanes. The company aims for mechanical completion of the plant by 2013, with commercial operation in early 2014.

The company plans to organize sales efforts around key industries in Asia Pacific. The initial target groups include paint and coatings, construction, automotive, packaging, and pharmaceuticals. BASF will actively seek opportunities to support developing markets in relatively untapped locations, such as Vietnam and inland China, the company says.

Also by 2020, BASF plans to increase the number of employees it has in the Asia Pacific by 5,000. Already in China and India, the company has set up dedicated recruitment centers to manage the increase in hiring. The number of employees in research and development is also expected to double.

By 2012, BASF intends to reduce costs by $147.5 million (€100 million) annually. According to the company, an important aspect of the cost savings is the Site Optimization Project, which will increase capacity through debottlenecking production and exploiting technical synergies. Site optimization is already ongoing at the company’s integrated production sites in Kuantan, Malaysia; Nanjing, China; and Yeosu, Korea.

For further information, visit www.basf.com.