Bayer to invest heavily in China under new global strategy

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Last updated at: (Beijing Time) Saturday, November 29, 2003

Bayer to invest heavily in China under new global strategy

Bayer Chairman Werner Wenning said Friday the multinational chemical giant was to develop a world-class production base in China in order to realize its read justed goal of global dev elopment.

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Bayer Chairman Werner Wenning said Friday the multinational chemical giant was to develop a world-class production base in China in order to realize its read justed goal of global dev elopment.

As a major strategic step taken after reshuffling its global business, Bayer announced the construction of its largest investment project in China this week. The 450-million-US dollar chemical plant, located in the Caojing Chemical Industrial Zone in Shanghai, is scheduled to go into operation in the second quarter of 2006 and turn out 200,000 tons of polycarbonate every year.

The project was part of Bayer's capital input plan for China, the most prominent investment area for Bayer in the Asia-Pacific region, Wenning said at a press conference. For the years up to 2010, Bayer Materials Science will allocate 75 percent of its global strategic investment to the construction of production facilities at Caojing, Shanghai. The total investment is expected to amount to 3.1 billion US dollars.

Bayer Materials Science is one of the three subgroups formed through the reorganization of the global Bayer Group, which was aimed at focusing the company's financial and management resourceson such core businesses as health care, nutrition and innovative materials.

"Growth will come primarily from products containing newly researched active ingredients, from the consumer health care business and from Asia," Wenning said.

"China has highest priority in our strategic development plans," he said.

Bayer's sales revenue in the Asia-Pacific region has more than doubled over the past decade. During that period, China became the fourth-largest consumer of chemical products in the world, following the United States, Japan and Germany.

Though Bayer's Asia-Pacific sales revenue fell by 6 percent in the first nine months of this year, largely due to the SARS crisis and the separation of New Co operations from the company, its salesin China grew by 29 percent.

"China has successfully assumed the role of the growth engine for the Asia-Pacific region," Wenning said.

He predicted that, from 2004 to 2006, the manufacturing industry in China will grow at an annual rate of 8.5 percent. The growth of the manufacturing industry will stimulate the growth of consumption and gross domestic product (GDP), which in turn will increase the demand for chemical products, he said.

Wenning added that since local production in China can not satisfy the fast growing demand for chemical products, the country will see substantial imports and a significant inflow of foreign direct investment into its chemical industry.

"We firmly believe that China is one of the most interesting and promising markets to invest in," Wenning said.

Besides Bayer, the other two leading chemical producers in the world -- BP and BASF -- have already built large chemical plants in Caojing.

According to Bayer's estimate, the sales revenue of Bayer Materials Science will double in the Asia-Pacific region in the next ten years. By investing heavily in China and other Asian countries, the company is planning to increase Asia-Pacific share of its global sales revenue from 18 percent to 25 percent by 2007.

In the next stage of investment in China, Bayer is to build a world-class, highly integrated production base in Caojing. By bringing its various world-class production facilities to one location, Bayer expects to achieve the maximum synergy effect thatis crucial for cost-effective polymer production.

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