The chemical companies of China

The assessment of various chemical companies of China has revealed certain unique features (scales of operations, quality, technological innovation etc) which have helped these firms strengthen their foothold in the industry.

Key Chinese firms have succeeded in achieving vast scales of operations, enabling them access to both domestic and foreign markets. Majority of these companies also have succeeded in ensuring product quality. Sinochem, for instance, is China’s fourth largest chemical and petrochemical company and is engaged in sectors like energy, agriculture, chemicals, real estate and financial services. It is one of the largest fertilizer suppliers and distributors, equipped with formidable chemical logistics infrastructure. Sinochem is one of the leading pesticide producers with two national pesticide R&D centers and three production units.

Hubei Yihua Group is a major polyol producer and has a domestic market share of 80 per cent. This firm also produces fertilizer, chlor-alkali and mineral salts. It has over 20 subsidiaries and 60 per cent of its markets are located in Africa, Southeast Asia and South America. The firm also has five joint ventures and 26 R&D centers. They focus on phosphorus chemical industry, salt chemical industry, coal chemical industry, mine development and natural gas chemical industry.

A distinguishing feature of the Chinese chemical companies is that the major players are prepared to bring about upgrades and reforms. Many chemical companies are improving their safety and management systems and including new materials and green products in their product portfolios.

Another vital characteristic of Chinese companies is their willingness to promote technological innovation, spend on research and improve their production processes. Chemical companies have started investing huge amounts of money and resources into producing new chemical materials required for information technology, energy, automotive, green construction etc. Increasing number of companies are aiming for technological innovations as well as self-sufficiency and sustainability. The Wanhua Chemical Group intends to revitalize the national polyurethane industry through improved technology.

Risun along with its subsidiary Xu Yang Holdings is a major coal chemical product manufacturer and has been trying to strengthen its position in a new sector using technology from Germany and international research institutes.

Nanjing Red Sun Group has succeeded in developing eco-friendly, low toxicity pesticides through its own efforts. These companies have also benefitted from the infrastructure support provided by the Chinese government.

China’s approach to R&D has changed drastically in the past few years and spending on research is expected to increase exponentially in the future. China has already become a global leader in areas like chemistry, engineering and materials science.

A vast majority of the chemical firms have shifted their focus from product management to branding. These firms are engaged in active promotion of their brands in the world market. Shandong Linglong Group has formulated a strategy of improving quality and obtaining patents to market tyres in the international market. Its strategy of setting up a capacity of 3.5 million tyres per year and manufacturing high-value brands has helped the company become a global name.

Apart from producing high quality products, Chinese firms are also focusing on improving the quality of their services. Hubei New Yang Feng has developed a national sales team and new marketing concepts as well as a competitive management model. The company employs over 400 expert sales staff, 2000 first level agents and 30,000 second level retailers throughout China. They have broadened the range of their services to include soil survey testing, dissemination of fertilization knowledge and agricultural management.

Wengfu Group has focused on making its brand appear environment friendly. The enterprise works on integrating phosphorite mining with other fertilizers. Wengfu makes use of several hazardous materials and thus focuses on waste utilization and efficient use of resources to improve its global image.

Thus, Chinese companies no longer focus only on scales of operations but are engaged in producing eco-friendly, quality products and establishing a sustainable economy. 

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Growth of Chinese chemical industry led by urbanization

The chemical industry of China is expected to face a number of challenges but not without enjoying its share of opportunities. Urbanisation, increasing investment in infrastructure projects and growing consumer spending will be major sources of demand for bulk chemicals, specialty chemicals and high grade polymers.

The government is currently engaged in improving domestic consumption. The growing population and household income, increasing consumers and governmental support for domestic consumption are reasons to be optimistic. The retail market is likely to witness exponential growth and private consumption will account for a greater share of GDP, from 35 per cent in 2009 to 40 per cent in 2016. Consumer electronics are expected to grow by 23 per cent per year between 2008-2015.

With continuity in urbanisation consumption sources will also increase. China will likely achieve an urbanisation level of 60 per cent by 2020. Development of infrastructural facilities is on top of the priority list of the government and is also planning to use efficient transport logistics to link the country together.

Settling the rural workers into city life could cost around RMB 650 billion a year. About 390 million more people from rural areas are expected to be urbanised before 2030. The government will have to spend around RMB 51 trillion (USD 8.3 trillion) to complete the process of urbanisation. Theses figures indicate that China's domestic consumption may increase from RMB 16 trillion in 2011 to RMB 30 trillion in 2016.

The urbanization process will also improve infrastructure construction and investment in many related industries. Increased building construction and output in the manufacturing sector will drive gains. Changing building codes to limit energy use in building applications as we all as measures to limit energy consumption in manufacturing processes will further growth of the industry.

Building construction sector will continue to account for over two fifths of China's insulation demand. Construction is expected to witness a growth of 24 per cent until 2015. Urbanization, with greater focus on green buildings will spur further growth.

Water treatment is also growing at a fast pace. Increased water stress and environmental concerns in China generate huge potential for water treatment chemicals. The water treatment chemicals market is expected to be worth USD 3.3 billion a year by 2018.

Waste water treatment chemicals sector is also expected to witness major growth. Chemical firms have been engaged in developing green chemical products and nanotechnology to make the waste water treatment programme more effective.

Urbanisation and stable demand for automotive, wind & solar energy, water treatment, consumer electronics, packaged foods, construction sectors and water treatment will increase consumption of fine and specialty chemicals.

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Qatar to ensue with major projects despite losing the right to host World Cup

Qatar which is noted as one of the richest country per capita of the world by becoming the third largest natural gas and oil reserves in excess of 25 billion barrels. By becoming the richest country in the world, the impact on its financial and economy markets might latent much smaller than the propel to its reputation and with the blistering growth of the country might slowdown if it misses the right to host the 2022 World Cup soccer tournament.

Moreover, question are being raised as the country at this instant risks on losing the right to host the 2022 World Cup and after a long protracted voting process and to host the major sporting event in the year 2022, the Middle Eastern country in the year 2010 had beat Australia, Japan, South Korea and the US. The FIFA World Cup which is held after every four years by the Federation Internationale de Football Association (FIFA) is currently under pressure to demeanor a re-vote in the midst of recent accusation of bribery which had implicated in the bidding process, which resulted in Qatar winning the bid to host the event.

According to the Middle East-based industry source, the Petchem industry does not really need to be too concerned as the country will progress with its goals to develop the country rapidly with or without the World Cup. Moreover to build infrastructure, including stadiums the country is almost ready to squander USD 140 billion and the scheduled of massive spending is probable to decipher to robust demand for petrochemicals.

As per the data from state-owned Qatar National Bank (QNB), in the year 2013 the economy of Qatar had grow 6.5% due to aggressive government spending, however this year it is estimated to pick up pace and post a 6.8% growth. One of the major UAE based Polypropylene (PP) trader said that there are sequels benefits on hosting the World Cup as the demand of Petchem will augment in Qatar and the downstream sectors will flourish.

Furthermore the expected surge in the demand was one of the plans of the government to thrust in USD 25 billion to give a boost to the petrochemical capacity of Qatar to 23 million tons by 2020 in compare to 16.8 million tons in 2012. However with the fear of a FIFA World Cup pull-out, none of the Qatar projects are expected to be halted mid-way.

According to the industry experts, in the years leading to the World Cup event in 2022 the country has budgeted around USD 20 billion in investment for tourist infrastructure which will include the building of the Hamad International Airport in the second quarter of 2014. However if the country loses the chances to host the 2022 world cup then it might delay the construction of world scale football stadiums or sport complexes.

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Kuwait all set to be a a major global energy exporter

The year 2013 for Kuwait was noted as the richest nation of the world with USD 39,706 GDP per capita and as per the Middle East industry sources the country has heavy investments into infrastructure to boost its status as a major global energy exporter. According to the estimates from the Organisation of the Petroleum Exporting Countries (OPEC) the country is the fifth largest crude oil reserves amid the 12 OPEC member countries and the current production of crude oil is around 2.98 million barrel/day wherein about 70% of it gets exported.

This year 2014, for infrastructure projects the country will be spending USD 3.5 billion which is noted more in compare to last year. One of the UAE based market players said that to stay ahead of the camber in the Gulf Cooperation Council (GCC), the country needs to boost its infrastructure, moreover countries such as Qatar, Saudi Arabia, Bahrain, Kuwait, the UAE, and Oman embrace the GCC.

In the beginning of 2014, a power outage had hit one of the petrochemical hub of Shuaiba and a petrochemical complex in the port town which was operated by one of the Kuwaiti producer EQUATE which is an international joint venture between Petrochemical Industries Company (PIC), The Dow Chemical Company (Dow), Boubyan Petrochemical Company (BPC) and Qurain Petrochemical Industries Company (QPIC).

Furthermore, due to power outage at the petrochemical complex which had a production of Ethylene, Polypropylene, Ethylene Glycol, Styrene Monomer, Benzene and Paraxylene and also operations of three oil refineries which have a combined output of 930,000 barrels/day located in Mina Ahmadi, Mina Abdullah and Shuaiba at Kuwait were all disrupted. However to upgrade the petrochemical and crude oil capacity, Kuwait pushes on to improve the infrastructure.

By the year 2015, EQUATE will be taking a glance on increasing its PE capacity from its current production capacity of 825,000 mt/year through a debottlenecking process at its plant. Moreover according to the industry experts, the country has nearly production capacity of 3.4 million tons/year of basic chemical and meanwhile the output of crude oil has been estimated to rise in the year 2018, once the construction of a new refinery of 615,000 barrels/day in the district of Al-Zour gets completed.

Furthermore for most of the foreign industries, Kuwait is an undeveloped giant and for multinationals the imperative infrastructure and immense oil wealth apparently needs to make it an attractive prospect, however the country mostly depends on the efforts to drive economic reform bearing fruit. Additionally amid Iran and the Gulf Arab states which includes the main power Saudi Arabia, Kuwait is seen by few as a budding bridge.

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