(MENAFN- Asia Times)
Blaring headlines such as“US bans 'advanced tech' firms from building facilities in China for a decade” and“China's zero-Covid policies are crippling its economic outlook” distract from more mundane but arguably more important corporate news coming out of China.
Those new developments include the start of production at BASF's new industrial complex in Zhanjiang and the final commissioning of ABB's state-of-the-art robotics factory in Shanghai, big new European investments that buck the trend of US“decoupling” with China.
On September 6, BASF announced the inauguration of the first manufacturing plant at its Zhanjiang Verbund industrial complex in China's southern Guangdong province. The plant is designed to produce 60,000 metric tons of engineering plastics per year, primarily for supply to the Chinese automotive and electronics industries.
It will raise BASF's annual engineering plastics capacity in the Asia-Pacific region to 420,000 metric tons. Headquartered in Germany, BASF is the world's largest producer of chemicals.
The Zhanjiang Verbund site is about nine square kilometers in size and the total investment is expected to reach about 10 billion euros (US$10.1 billion) by 2030. It will be BASF's largest foreign investment to date and the first heavy chemical industry project in China to be wholly owned and operated by a foreign company.
“Verbund” is BASF's approach to integrated manufacturing. As explained on the company's website,“The driving principle of the Verbund concept is to add value through the efficient use of resources. At our Verbund sites, production plants, energy and material flows, logistics, and site infrastructure are all integrated.”
“The Verbund system creates efficient value chains that extend from basic chemicals all the way to consumer products. In this system, chemical processes make use of energy more efficiently, achieve higher product yields and conserve resources. By-products of one process are used as starting materials for another process. We thus save on raw materials and energy, minimize emissions, cut logistics costs and realize synergies.”
BASF currently operates six Verbund sites – in Germany, Belgium, Texas, Louisiana, Malaysia and Nanjing. The Zhanjiang Verbund will be the company's seventh and third largest.
Workers on BASF's Zhanjiang Verbund site in Guangdong province. Image: BASF
According to Dr. Markus Kamieth, BASF's executive director responsible for the Asia-Pacific,“The Zhanjiang Verbund site will be built with the latest digital technologies and to the highest safety standards. It will provide high-quality, low-carbon-footprint products and build up stronger business connections with customers in South China, underlining our commitment to the Chinese market.”
A second plant dedicated to the production of thermoplastic polyurethanes is scheduled to come on stream in 2023. That will be followed by the construction of a steam cracker for the production of ethylene and other petrochemical products. BASF plans to power the entire Zhanjiang site with renewable energy by 2025. Expansion and diversification of production are expected to continue until the site is fully utilized at the end of the decade.
On September 2, China Daily reported that ABB's new robotics factory in Shanghai is in the final stage of commissioning and should be operational within the next few months. Built at a cost of about 150 million euros, it will be“a center where robots make robots,” according to Sami Atiya, head of ABB's Robotics & Discrete Automation business.
A multinational enterprise headquartered in Zurich, ABB is also a leader in process automation, motors power transmission products and electrification.
When ground was broken on the facility in 2019, ABB announced that it would be“the most advanced, automated and flexible factory in the robotics industry worldwide, utilizing the latest manufacturing processes and [having] the largest R&D, production and application base of robotics in China.”
The announcement continued:
ABB's new factory fits with China's 14th Five-Year Plan, which aims to make the country“a global hub for robotics innovation by 2025, putting together a group of leading enterprises with international competitiveness and forming several industrial clusters with an international influence,” according to a Ministry of Industry and Information Technology document published in English by Beijing-based Pandaily technology media company.
ABB has said its Shanghai facility will be the most advanced, automated and flexible factory in the robotics industry worldwide. Image: Facebook
In July, French aerospace giant Airbus announced that it had received orders for 292 A320 passenger aircraft from Air China, China Eastern, China Southern and Shenzhen Airlines,“demonstrating the positive recovery momentum and prosperous outlook for the Chinese aviation market.”
China Southern Airlines – which canceled orders for more than 100 Boeing 737 MAX aircraft in May – ordered 96 new units. The Boeing orders were reportedly canceled due to safety concerns and an uncertain delivery schedule, but in the eyes of many observers the main reason was politics
China's nationalist Global Times gloated:
“It is natural for the US side to feel sour after losing the competition to Airbus… Who can feel rest assured engaging in large-scale trades with a country that talks about 'decoupling' frequently, wields the stick of sanctions, and often introduces bills to restrict trade with others out of thin air?”
Boeing lamented:“As a top US exporter with a 50-year relationship with China's aviation industry, it is disappointing that geopolitical differences continue to constrain US aircraft exports.”
Could European politicians, worked up over Xinjiang and Taiwan, follow the American lead and sabotage the success of European companies in China? They already have, on one notable occasion.
In the third quarter of 2021, after the Swedish government banned the use of Huawei and ZTE's 5G telecom equipment in Sweden, Ericsson's sales in China fell 74% year-on-year. Its share of China Mobile 5G radio access network orders dropped from 11% to 2% and China's contribution to its total revenues dropped by half to 4%.
Luckily for Ericsson, China did not account for a large share of its global business and strong demand for 5G equipment in other countries offset almost all of what it lost in China. It is, however, difficult to imagine a similar outcome with industrial chemicals, robots and aircraft for European producers.
An A320neo airplane made for delivery to China Southern Airlines, a leading airline carrier in the country. Credit: Airbus.
In June, the European Union Chamber of Commerce in China released its latest Business Confidence Survey. It concluded that“while most European companies in China posted positive revenues and were profitable in 2021, doing business became more difficult for the majority.”
This was primarily due to Covid but regulatory barriers and uncertainty were also cited as reasons for dissatisfaction. Supply chains, staffing and IT are increasingly being localized. European executives feel caught between the desire to reassess their exposure to China and the fact that it is too important a market to abandon.
Contrary to this conclusion, BASF, ABB and Airbus seem to be going full speed ahead. Perhaps Europe's alarming experience with sanctions on Russia will temper its policy toward China.
Follow Scott Foster on Twitter at @ScottFo83517667
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