BASF’s $10bn China plant followed ‘market logic not trade war’
Germany’s BASF is investing $10bn in a new manufacturing base in Guangdong province, China. It is the company’s largest ever greenfield investment, according to fDi Markets, and China’s first wholly foreign-owned chemicals complex. Sebastian Shehadi reports.
Analysts have speculated that the US-China trade war helped BASF, the world’s largest chemical producer, secure a huge unusual deal, as China tends to relations with Europe in order to compensate and downgrade its feud with the US.
A BASF spokesperson told fDi: “Our investment decisions are not based on short-term current events, but on market logic. We build plants that are operated for several decades”.
However, on the topic of BASF’s full ownership over the plant – a rare feat in China – the spokesperson stated: “China wants to set clear signals for the opening of the market. In this respect, we are happy to have these opportunities…BASF has been a long-time partner of China and has earned the trust to operate chemical sites at highest [safety] standards”.
BASF will establish the new manufacturing base in Zhanjiang, thereby expanding its range of 25 chemical sites in China.
Guangdong is China’s largest province, with 110 million inhabitants and above-average GDP growth. In short, it is an economic powerhouse.
“This province is where many of our key customer industries sit with their investments. Guangdong imports 20 million chemicals. In this respect, there is also a great deal of interest in building up the value chains locally. The whole province will benefit from this investment: creating job opportunities, bringing in state-of-the-art technologies to drive the local economy,” said BASF.
Set to be complete in 2030 but partially operational by 2026, the site will include petrochemical plants, notably a steam cracker with a planned capacity of 1 million metric tonnes of ethylene per year, according to fDi Markets.
With a whopping 348 greenfield investments since 2003, BASF is the 16th most active investor in the world, and the new China plant is the company’s most capital-heavy foreign project on record, according to fDi Markets.
China is the world's largest chemical market with a 30% share of the global market, a figure that BASF expects will grow to 50% by 2030.
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