HONG KONG/LUDWIGSHAFEN, Germany – BASF has outlined its Strategy 2020 for Asia Pacific, with the goal of growing on average two percentage points faster than the Asia-Pacific chemical market each year. With expected market growth of four to five percent per year, this would double regional sales by 2020 while earning a premium on cost of capital.
This ambitious strategy is based on growth and new business initiatives. Under its new strategy, BASF will initially target five key growth industries in the region, will increase headcount by at least 5,000 from a current figure of approximately 15,000, and plans to generate 70 percent of regional sales from local production. At the same time, the company will invest EUR 2 billion in the region between 2012 and 2013 and aims to create efficiency improvements that are expected to save at least EUR 100 million annually by 2012.
To support the goal of producing 70 percent of its sales within the Asia-Pacific region, BASF plans to invest EUR 2 billion between 2009 and 2013. This amount includes BASF’s 50 percent share of the $1.4 billion expansion of its integrated chemical production joint venture in Nanjing, China, which was approved by the national government in July 2009. In Chongqing, China, BASF is in the planning phase for a 400,000-ton-per-year plant for MDI, a precursor for polyurethanes. BASF and the Chongqing authorities aim for mechanical completion of the plant by the end of 2013 and commercial operation by early 2014. Final approvals of the project by Chinese regulators are expected in 2009, and subsequently the BASF Board of Executive Directors plans to approve the investment in the first quarter of 2010.
In Asia Pacific, BASF will organize its sales efforts around key industries in order to grow faster than the market. The company has established an initial set of industry target groups where it intends to become a preferred supplier, including the automotive, construction, packaging, paint and coatings, and pharmaceuticals industries. By looking closely at the value chains in these key industries, BASF will better understand its customers’ needs and will be better positioned to provide products and solutions based on BASF’s global knowledge and resources.
Already present in 15 countries in the region, with significant operations in China, Japan, Korea and India, BASF will also actively seek opportunities to support rapidly developing customer markets in relatively untapped locations, including Vietnam and inland China.
To achieve its goals, BASF will implement an enhanced development plan to strengthen its existing local talent base. By 2020, BASF expects to increase its headcount in Asia Pacific by at least 5,000. In its two challenging growth markets, China and India, BASF has set up dedicated recruitment centers to manage the increase in hiring. The company will double the number of employees in research and development by 2020, especially at its two major R&D clusters in China and India. Currently, BASF has 300 employees working in R&D at 15 sites in Asia Pacific.
BASF plans to reduce costs by at least EUR 100 million annually by 2012, increasing the efficiency of its existing operations. An important aspect of this effort is the company’s Site Optimization Project, which aims to increase capacity through debottlenecking production and by exploiting technical synergies, for example in production processes or across sites. All measures implemented under this project are expected to recoup their costs within one year.