Our engagement in China
BASF has been conducting business in Asia Pacific for a long time. The success story began back in 1885 with the trade in textile dyes. Since then, our commitment has grown and diversified steadily. Today, BASF serves nearly all key industries across the region. With further investments in China, we are expanding our excellent position and accelerating BASF’s profitable growth in the world’s largest chemical market.
The Asia Pacific region is the main growth driver for the chemical industry and will continue to gain in importance. In 2000, the regions EMEA, North and South America, and Asia Pacific each accounted for about one-third of the global chemical market. By 2030, Asia Pacific will represent around 70 percent of the global chemical market with more than half of the global chemical industry sales and about three quarters of global chemical production growth coming from China alone. That is why we are investing.
Considering the market development, BASF is still underrepresented in the fastest growing and largest chemical market of the future. In 2022, about a quarter of our sales came from Asia Pacific. Greater China accounted for less than 15 percent of BASF’s global sales, but for roughly 50 percent of the global chemical market. That is why we are strengthening our foothold in China.
Approximately half of our global capital expenditures planned for the period 2023 to 2027 will flow into the Asia Pacific region to support our customers having a strong local production. In addition to larger projects in Southeast Asia, such as at our Verbund site in Kuantan, Malaysia or at sites in Singapore, our focus is on China. For example, we are expanding our Verbund site in Nanjing and our battery materials value chain with the joint venture BASF Shanshan. We are also building a new Verbund site in Zhanjiang (Guangdong province) in South China, which represents the largest foreign investment in BASF's history. Upon its completion expected in 2030, Zhanjiang will be our third largest Verbund site after Ludwigshafen, Germany, and Antwerp, Belgium.
Our investments in China are in line with our strategic principles: producing where our customers are and investing where we see opportunities for growth. We are producing in China for the Chinese market (local-to-local approach). Today, locally manufactured products account for about 75 percent of our sales in Greater China, that is, both to domestic companies and multinationals keen to take advantage of the growing Chinese market. Based on the development of the last 10 years and current projects, we expect the share of products made and sold locally in China to further increase in the future.
With our investments in China, we aim to gain additional market share in a dynamic market environment. This contributes to a better regional diversification of our global sales distribution. A strong foothold in Asia Pacific, particularly in China, strengthens our resilience and accelerates our transformation to net zero, for example, through state-of-the-art manufacturing assets and the extensive use of renewable energy. Furthermore, earnings contributions from China enable the green transformation in other regions.
We want and need to be strong and to be present in all the key markets: Europe, North and South America, and Asia Pacific. Therefore, through our commitment to China we are neither relocating parts of our production from Europe to China nor are we creating dependency on one single market.
At BASF, our investment decisions are always based on comprehensive analyses. Besides economic criteria, we also consider environmental, social and geopolitical aspects. We have thoroughly assessed the opportunities and risks of our engagement in China, involving external experts in the process. Our conclusion is that the opportunities for BASF outweigh the risks.
As part of our ongoing risk management, we continuously monitor (geo-)political developments, assess different scenarios, and take appropriate measures to mitigate risks and hedge our investments. This also means that we do not make individual investments or take individual risks that could jeopardize the long-term success of the BASF Group. This is also true for our largest investment project, the new Verbund site in Zhanjiang.
We are committed to doing business in a responsible, safe, resource-efficient and respectful manner. Our corporate values and our global Code of Conduct serve as our compass. They apply equally to all employees and sites wherever BASF operates. In everything we do, we are committed to upholding internationally recognized principles and standards, such as the Universal Declaration of Human Rights. Within our immediate sphere of influence, we do not accept or tolerate any violation of these internationally recognized principles or our standards.
We review our own operations and those of our suppliers for compliance with our standards on a regular, risk-based and systematic basis. Should investigations reveal deviations from our standards, corrective actions are taken within a reasonable timeframe as part of a clearly defined follow-up process.
The great challenges we face today, such as climate change, can only be solved through global coordination and cooperation – between governments as well as companies, science and society. That is why it is important to maintain dialogue, relationships and collaboration with China – despite differing political systems. Navigating this complex and changing geopolitical environment is not always easy. Finding the right balance is a necessary task requiring our constant attention.
As a global company, we must be present in the fast-growing Chinese market. We clearly stand by our values and our commitment to human rights, and we work with partners on climate protection. One example of this is the first Sino-German offshore wind farm project, to be built in South China in cooperation with Mingyang. With a total installed capacity of 500 megawatts, the planned wind farm is a key milestone in supplying BASF’s Zhanjiang Verbund site with 100 percent green power by 2025, making BASF a frontrunner in sustainability and a trusted partner in the transformation of the Chinese chemical industry to climate neutrality.
BASF in China - a brief history
1885 - First delegate
BASF's activities in Greater China began in 1885, although it did not have its own production facilities. The trading company Jebsen & Co. secured the representation of the Badische Anilin- und Sodafabrik for Hong Kong and southern China and from then on sold BASF products, in particular textile dyes such as synthetic indigo. The partnership between BASF and Jebsen & Co. was to last for over 80 years and bring profit to both.
1969 - First own production in Greater China
As early as 1962, BASF declared a general interest in building production facilities in Greater China. The first investment was realized in 1969, when BASF founded a subsidiary in Taiwan. This entity bought into Cheng Kuang Chemical Co. Ltd. which operated a formulation factory for crop protection products in Taipei. The joint venture became the nucleus of BASF’s growth in Taiwan: In 1989, it was renamed BASF Taiwan Ltd.
1988 - First joint venture in Mainland China
In the 1980s the time had come for direct investment into production sites in Mainland China. In 1988, BASF founded its first joint venture in Mainland China: Shanghai Gaoqiao BASF Dispersions Co. Ltd., which as BASF’s longest-standing production facility in China makes styrene-butadiene dispersions for paper coating and carpets. Other joint ventures followed.
2005 - First Verbund site
In 2005, BASF inaugurated its first Verbund site in China, the Nanjing Verbund site - jointly run by BASF and China Petroleum & Chemical Corp. (Sinopec). The initial joint investment by both partners amounted to $2.9 billion. Following initial key expansions in 2012 and 2014, an ongoing expansion phase is scheduled for completion before the end of 2023.
2006 - Further investments
Since 2006, BASF continuously increased production capacities at various sites. These include an integrated isocyanate production site at the Shanghai Chemical Industrial Park in Caojing. In order to serve the growing market in China, BASF constructed another large MDI plant in Chongqing, which started production in 2015.
2012 - First Innovation Campus
In 2012, BASF inaugurated the Innovation Campus Shanghai, located at the BASF Shanghai Pudong Innovation Park. Combining technical development capabilities with industrial design expertise, it serves the innovation demand of almost all major industries. The third expansion phase was inaugurated in 2023, with new laboratories for advanced materials and systems as well as for chemical engineering.
2019 - Second Verbund site
In 2019, BASF officially launched its smart Verbund project in Zhanjiang, Guangdong province, China, and commenced building its first plants. The total investment is up to €10 billion by 2030. Upon completion, it will be operated under the sole responsibility of BASF as the third-largest Verbund site after Ludwigshafen, Germany, and Antwerp, Belgium - and a role model of smart and sustainable production both in China and globally.
2021 - Foundation BASF Shanshan
In 2021, BASF and Shanshan have formed the joint venture “BASF Shanshan Battery Materials Co., Ltd.”. It focuses on the rapidly growing electric vehicle (EV) market, while continuously serving global consumer electronic and energy storage segments. It has sites in the provinces of Hunan and Ningxia. A first expansion of capacities is underway. The new lines in Changsha gradually started commissioning from the fourth quarter in 2022.
2022 - First plant at Zhanjiang
In 2022, BASF inaugurated the first plant at the Zhanjiang Verbund site. It supplies engineering plastics compounds to customers, particularly in the automotive and electronics industries. With the next plant producing thermoplastic polyurethanes (TPU) to come on stream by 2023, the focus in Zhanjiang is to build the core of the Verbund, including a steamcracker along with downstream plants for the production of petrochemicals and intermediates, among others.
2023 - First wind farm
In 2023, BASF and Mingyang agreed to jointly construct and operate an offshore wind farm in South China with a total installed capacity of 500 megawatts. This is the first Sino-German offshore wind farm project involving development, construction and operation. The majority of the power generated will be used to supply the BASF Zhanjiang Verbund site.
A look at 130 years of BASF history in China (1885 - 2015)
To mark BASF's 150th anniversary, in 2015 the book "Breaking New Ground. The History of BASF in China from 1885 to Today" was published. In it, author Michael Grabicki, for many years (until 2012) head of Corporate Media Relations at BASF, traces 130 years of BASF's development in China.
Breaking New Ground. The History of BASF in China from 1885 to Today
Hardcover (2015): 382 pages
HOFFMANN UND CAMPE VERLAG