At BASF, the world’s largest chemical producer by turnover, Asia revenues reached €12.5bn (US$16.3bn) in 2010, or about 21% of the company’s global sales. Albert Heuser, the firm’s president of market and business development in Asia Pacific, says that in the first three quarters of 2011, BASF’s sales increased across all segments of its business in Asia Pacific. China alone accounted for sales of €5.8bn (US$7.5bn) in 2010, making it the third largest market for BASF globally, after Germany and the US.
“We target regional growth of around 8% per annum in Asia Pacific between 2010 and 2020,” Mr Heuser says. By 2020, BASF expects Asia to account for 25% of its global sales. Asia is increasingly important not merely as a market, but also for production—BASF forecasts that emerging markets will contribute about 60% of total global chemical production by 2020.
Mr Heuser says that BASF is striving to develop its portfolio towards “more market driven and innovative businesses”. For instance, over the past several years, the company has made acquisitions that build its capacities in engineering plastics, electronic chemicals, catalysts, water-based coatings, pigments and plastic additives. The company has simultaneously divested businesses in pharmaceuticals, fibres, printing systems, polyolefins, agro generics and vitamins premix.
He adds that across Asia, the adoption of new technologies is essential. For instance, the company recently completed the second phase of its “highly-integrated, highly energy-efficient” production complex in Nanjing which serves multiple industries such as agriculture, construction, electronics, pharmaceutical, automotive and chemical manufacturing. Furthermore, BASF’s construction chemicals division is moving to strengthen its focus on “third generation technology” for the concrete admixture market in China.
“At the same time we are looking for new ways to take advantage of the development of the region from an operational standpoint,” Mr Heuser says. BASF has set up an engineering and technical procurement office in Shanghai, which represents an important part of the firm’s global engineering and procurement network. The office provides project management and execution services for projects in Asia, and engineering and technical procurement services for non-Asian projects.
There is a need to ensure cost structures are competitive, says Mr Heuser, and BASF is doing this through efficiency measures such as fixed cost savings, capacity increases and better sourcing. “The intensity of competition has increased in the Asia Pacific region, with new capacity coming on stream from multinational companies, state-owned and private companies throughout the region,” says Mr Heuser. “Local competitors are improving their capabilities, but this varies widely from product to product.”
In order to maintain its profitability over the next few years, Mr Heuser wants BASF to move downstream towards customer industries so that by 2020 the share of its sales of classical chemicals will be closer to 30%, while customised products, functionalised materials and solutions will reach around 70%.
