BASF Gears Up to Invest Big in China

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German chemical giants BASF are ready to invest billions of dollars in multiple projects in China. BASF has announced that it will be investing $10 billion in Zhanjiang situated in the Guangdong province of China. Also, BASF announced it would be doubling the size of a giant plant in Nanjing which it operates in collaboration with Sinopec, a state-owned Chinese firm. The move comes after the Chinese government is warmly welcoming investors from Europe on the back of rising trade tensions with the United States of America. According to industry experts, BASF is trying to capitalize on the opportunity and investing in one of the fastest growing chemical markets in the world.

With its GDP almost equaling South Korea, Guangdong is a profitable market for BASF to explore. Managers working with the company suggested Zhanjiang already has the infrastructure required to build a plant in the region. Also, the region is a storehouse of ethylene cracker and will produce olefins and other unspecified chemicals. The products of the plant will be sold in the Guangdong province, Southeast Asia, and other parts of China. The city of Zhanjiang is already home to a large steel factory and construction of a Sinopec petrochemical factory in the region is underway. The city will be soon be served by a bullet train putting it at a three-hour distance from BASF’s headquarters based in Hong Kong.

BASF has been operating in Nanjing since 1996 and has invested $900 million in the region in association with Sinopec. The recent investment in the region was dubbed as a logical sequence by administration working in BASF. Sinopec and BASF will invest half of the funds required to build the new chemical plant in Nanjing while the other half would be invested by Sinopec’s subsidiaries in Sinopec Yangzi Petrochemical. The new chemical plant that is estimated to produce one-million-metric-ton-per-year of cracker will be considered as a separate joint venture with Sinopec. The products from the olefins and other products from the new chemical plant will be supplied to Yangzi and the BASF-Sinopec complex already in place in the region. BASF has been present in the Nanjing for over 20 years and will be looking to capitalize on the ground staff they have built over decades. With Sinopec looking after most of the investments required for the new chemical plant and providing a competent labor force, BASF will be looking to maximize its productions in the region and derive huge profits from the $4 billion it is expected to invest in the region.

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