Specialty chemical maker embraces more growth opportunities in China

HUIZHOU, Guangdong - Despite a growing number of foreign companies recalling manufacturing business from the Pearl River Delta to their lands of origin, the Swiss specialty chemicals company Clariant AG believes the Chinese market still offers huge growth opportunities.

"Some foreign companies have moved their businesses back to their homelands. But these companies are traditionally concerned with lower-end manufacturing. As one of the market leaders in high-end specialty chemicals, Clariant will treat China as an important growth market," said Per Sjoeberg, head of Clariant Greater China.

Following the inauguration of an ethoxylation plant in Daya Bay in Huizhou in Guangdong province last week, the company expects to see double-digit sales growth in China this year.

A number of foreign manufacturers, especially those from the United States, have recalled their businesses following a decline in profits and an increase in labor and production costs that started to hit the Pearl River Delta earlier this year.

For example, the US headphone producer Sleek Audio LLC has moved its manufacturing base from Dongguan in Guangdong to Florida, according to the Yangcheng Evening News.

Moreover, US companies have invested some $2.5 billion in China during the past eight months, a drop of 14.4 percent compared with the same period in 2010, according to sources with the Ministry of Commerce.

"China is already one of the world's largest markets for chemicals, given its leading global position in the areas of personal care, construction and housing, agricultural protection and automobiles, which will create huge demand for specialty chemicals," said Sjoeberg.

Clariant's Daya Bay plant, which covers 80,000 square meters, has an initial designed capacity of almost 50,000 tons annually, of which up to 90 percent will serve the rapidly growing demand in China and other Asian markets, the company said.

The plant is Clariant's first ethoxylation production center in Asia, and the largest site for its global Industrial and Consumer Specialties Business Unit.

Some experts are predicting that within the next few decades, Chinese companies will manufacture more chemicals in absolute terms than the combined output of today's largest producers, the US and Europe.

Clariant's global sales amounted to 7.1 billion swiss francs ($7.86 billion) last year, with approximately 8 percent coming from Chinese operations.

Clariant has invested 200 million swiss francs in China and the surrounding region during the past five years, the company said.

"We have great confidence in the regional market and have a long-term commitment to invest and continue to support market growth in China," Sjoeberg said.

The rapid growth of the Chinese market saw Clariant's global sales increase by 22 percent in 2010.

"Looking to the future, China will be the most important market for us, as more Chinese manufacturers move up the value chain to drive demand for specialty chemicals," said Sjoeberg.

He added that the company currently has no plans to make acquisitions in China.

"We should secure the growing momentum in a way that's right for us at this time. That's the natural part of our strategy in the Chinese market," he said.