Created: 1997-05-16, Last update: 1997-07-20, Author: Holger Blasum, URL: http://www.blasum.net/holger/wri/econ/int_bus/chinbioc.html, Parent: http://www.blasum.net/holger/wri/econ/int_bus/index.html

Euro-Chinese biotech & chemistry joint ventures

Some of my mid-97 excerpts; these scratch notes claim no completeness or objectivity. Sometimes relevant information on adjacent Asian countries is included.

1. General scope of investments

1.1. Chinese companies in Germany

Chinese companies prefer Hamburg (140 representative offices) before Frankfurt (66), Duesseldorf (19), Cologne (18), Bremen (10) and Muenchen (5) acc. to the Hamburgische Gesellschaft fuer Wirtschaftsfoerderung (FAZ 08/01/95, p.14).
1.2. Western companies in China
Hoechst invested 340 mill $ in 1994 and was going to triple that figure in the follwing years, headquarters moved from Taibei and Hongkong to Beijing (FAZ 11/16/95, p.28). 800 mil $ were put into in India (FAZ 02/19/96, p.13).

DuPont made on output of 300 mil $ in 1995, for 1996 a 25% increase is expected (HB 01/11/96, p.12). Active in nylon (FAZ 04/11/96, p. 22).

Bayer planned to put about 1 bil $ into Asia (FAZ 02/19/96, p.13). Current turnover is 450 mil $ (FAZ 03/26/96, p.23), main strategy: Bayer Healthcare Beijing (FAZ 03/26/96, p.23).

BASF will as JV (via BASF China Ltd., Beijing) invest 4-12 bil $ (half of it by BASF) to Nanjing over 6 years with Yangzi Petrochemical Co. (FAZ 02/19/96, p. 16), or Sinopec (HB 17/02/97, p.15), where a naphtha steam cracker plant is (FAZ 02/17/97, p.20), this issue made Zhu Rongji visit Ludwigshafen (FAZ 02/19/96, p.16). Sizes are 600,000t ethylene, 200,000t polyethylene, 250,000t ethylene oxide, 300,000t glycolene, 410,000t styrol, 160,000t acrylate, 250,000t oxo alcohols and 100,000t polyurethane predecessors TDI and MDI (like Antwerpen, HB 04/01/96, p.16), also polyurethane and nylon, and pigments. Heros: Volker Trautz (representative for polymers) and Peng Zhechun. General concentration on pharma and plant protection (FAZ 01/24/97, p.23) buying Hokuriku Seiyaku (FAZ 12/21/96, p.18). Competitors for this are DowChemical, BP and Shell (FAZ 09/21/96, p.19). In Kuantan (Malaysia) 250,000t of oxo alcohol, 100,000t of softeners and 40,000t of phthalate anhydride ourput is planned (ibd.).In Mangalore (India) a refinery is planned (600 mil $) over 4-5 yrs (ibd.), it will produce dispersions and pigments (FAZ 02/19/96, p. 16). Knoll India has a place on Indian pharma market (60 mil $ turnover, ibd.). Asean focuses shall be on polystyrols, acrylate (FAZ 02/19/96, p.16).

In Asia, Henkel began as metal treator for German automobile industry in 1988, but is now going to diversify: Henkel metal chemistry Shanghai Henkel Chemicals (since 1992), cohesives for cars: Shanghai Henkel Teroson Adhesives and Coatings ltd (since 1994), cosmetics in Zhaoqing (Zhuhai ar.) for cosmetics (mid 93), Henkel cosmetic in HongKong (Fa, PolyColor, feb 1994), Tianjin Henkel Detergents & Cleaning Prod. (Perlil supra), same in NE China Siping (Sept 94), adhesives with Shanxi Import and Export Coporation, Shantou construction adhesives (May 1994), Shanghai Henkel Oleochemicals (ethoxilates and textil additives end -94, Henkel Blick 01/95, p.6) ; there are 11 JV, all except one plant in Shanghai making turnover of 250 mil $ (1995 investment 250 mil $). Now trying to concentrate on the detergent and cosmetics sector (FAZ 03/25/96, p.18). For more recent information, see Henkel KGaA - News and Archive and Henkel KGaA - News and Archive.

2. Investments in individual sectors

2.1. Agricultural

2.1.1. Pesticides

Although the Beijing US embassy predicts that total pesticide use will even slightly decline in China in future, the quality and specificity of agents employed leaves room for much improvement. On this market Bayer is cooperating with the Academia Sinica Genetics Institute (Beijing) on plant protection (including research, Welt 01/17/95). BASF signed an agreement with the Ministry of Chemical Industry on plant protection (exchange of research results, personnel exchange, joint production of plant protection agents, HB 11/30/93, p.21). Hoechst is producing cotton insecticide (Agrevo?). DuPont is producing agricultural chemicals in Shanghai.
2.1.2. Fertilizers
See Ye (1994) for discussion on fertilizer demand.
2.1.3. Forestry
Bayer and Yiguang signed a 12.5 mil$ JV on timber plankings (Chinanews 07/11/1997).
2.2. Basic chemicals
Messinger Griesheim (part of Hoechst AG) cooperated with the Kunming Flat Glass Factory to set up a 10 mil $ plant to purify argon, nitrogen, hydrogen and oxygen (FAZ 05/21/96, p. 24).

Elf Atochem (licensed by Elf Aquitaine) will produce 10.000t hydrazine hydrate from 1998 from hydrogen peroxide,. The chemical can be used for pharma and plant protection (HB 02/21/97, p.17). In 1993, Bayer also was negotiating about hydrazine hydrate production (HB 11/30/93, p.21).

RWE-DEA produces surfactants (HB 03/07/95, p.24). Lurgi AG produces epoxides (HB 08/09/96, p.13) and calcination at Guiyang (SZ 09/25/95). Bayer plans to produce tanning agents (HB 11/30/93, p. 21). Rhein Chemie Rheinau GmbH (Mannheim, Bayer) in Qingdao as Rhein Chemie Qingdao Ltd. (70%, 22 mil $, HB 11/16/95, p.27). Eastman Chemical Co. (Kingsport/TE) for fine Chemicals with the YPC (HB 09/23/96, p. 17).

2.2.1. Pigments
Agfa Gevaert AG (74%), owned by Bayer, and the Agfa Wuxi Film Production JV want to produce an output of 50 mil $ until to 2000 with color film paper. Tianjin Elf is investing into ceramic pigments (HB 01/04/96, p.13). Bayer Shanghai Pigments produces iron oxides (plant for 20 mil $, FAZ 11/27/96, p.31).

Shanghai BASF Colorants and Auxiliaries Ltd. (75%) pigments for textile industry (09/23/96, p.17). Tianjin Dyestuff factory and Hoechst produce azo pigments (polymer industry, lack, FAZ 09/30/96, p.26). Qingdao Degussa Chemical Co. Ltd. produces industrial carbon black (set up in 1994).

2.2.2. Polymers
Yizheng chemicals (cooperating with Hoechst-Trevira) has set up a polyester production at Offenbach, with a production of 630000t/annum it is the world's 4th largest producer of polyesters (FAZ 09/12/95,p.23). Phillips Petroleum is producing polyethylene (HB 01/19/96, p.13). ICI is setting up polyurethane production (SZ 11/07/95, p.25, FAZ 11/03/95, p.29).

BASF is going to invest 500 mil $ in Shanghai Caojing with the Shanghai Gao Qiao Petrochemical Corp. (owned by Sinopec, Beijing) and the Shanghai Huayi group (HB 02/17/97, p. 15) for polyurethane production. Polystyrol and styrol are to be produced at Nanjing with Yangzi Petrochemical Corp. (HB 04/01/96, p.16). Styropor will be produced at 40,000t (40 mil $ plant, FAZ 05/08/96, p.29).

Bayer plans to produce Macrolon (HB 11/30/93, p.21); it has made a contract (70%) on polycarbonates with Beijing Guangyi Polycarbonate Panel Ltd. (12.5 mil $ input, HB 12/20/96, p.14, China Economic Window). Dow Chemicals (Midland MI) and YPC are producing package materials (HB 09/23/96, p.17). Nordenia and Dalian Shengdao Group will produce folien in NE China (HB 10/18/96, p.19).

Battenfeld will produce polymer tubes (FAZ 04/02/96, p.31). BP is researching in Chongqing (Presse 12/05/95, p.18). Rhein Chemie (Qingdao) sets up a 10,000 t/a speciality plant for rubber and oil industry basic products (C.&I. 07/96).

2.2.2.3. Synthetic textiles
DuPont and BASF plan to produce nylon, caprolactam (750 mil $ investment, FAZ 04/11/96, p.22). 450,000t, built 1998-2001 (HB 04/12/96, p.21). Their nylon can be used for carpets, another nylon plant is planned at Hainan or Malaysia (HB 12/20/96, p.13).
2.2.3. Washing ingredients & enzymes
Over the next ten years, NovoNordisk planned to put 210 mil $ into enzyme plant at Tianjin (HB 05/27/94, p.19). The Tianjin biotechnology plant at 125 mil $ was set up as a WFOE (Vanhonacker 1997:135). The washing powder output of Henkel in China already equals that of German production (SZ 08/04/97). Henkel (60%) and Guilin Synthetic Detergent Factory produce washing ingredients (40 mil $, FAZ 01/16/95, p. 20). Unilever NV, Weiss Ltd. (turnover more than 15 mil $ in 1995) and Weiss Cleaning Supplies (Zhongshan) Ltd. JV plan to produce detergents (HB 01/22/96, p.21). Benckiser (60%) and Power 28 make JV in Hubei (Calgon-like stuff..., FAZ 04/30/96, 31).
2.3. Health
2.3.1. Cosmetics
In Shanghai, Henkel (60%) and Kemeng Cosmetics (40%) set up a JV for cosmetics (FAZ 24/08/95, p.19). In Beijing, Henkel (60%) and the Liyuan company produce hair coloring agents for 18 mil $, including "Guangming" (HB 08/19/96, p. 10, cf. Business Weekly). The JV was signed on 03/19 (FAZ 04/01/96, p.16).
2.3.2. General nutrition
Unilever NV/Plc. (London/Amsterdam) researches in China (HB 10/08/96, p.12). Oelmuehle Hamburg AG revives business thanks to sales to Hamburg (FAZ 05/30/95, p.19). Senfter AG (Bolzano) with Shuanghui Industry Group Co. founds HuaYi Food Corp. (Luohe City/Henan) for ham production (HB 09/18/96, p.21).
2.3.3. General pharma
Consultech Beijing (China Business Guide) announced China Pharma Market Workshop Series in 1999, Union Plaza, Suite 803, No. 20, ChaoWaiStreet, Beijing 100020, 0086-10-65872446 On world-wide scale the fattest pharma companies are: Glaxo Wellcome, Merck & Co., Novartis=Ciba+Sandoz, Hoechst Merion Roussel, Hoffmann-La Roche, Bristol-Myers Squibb, Pfizer, American Home Products, Johnson & Johnson, SmithKlineBeecham (SZ 05/27/97, p.19).

Schwarz Pharma (Monheim) and Er Kang produce in Zhuhai three products for coronary diseases (NRZ 04/10/96). Luitpold (Munich, daughter of Sankyo) pharma delivering to China (SZ 12/24/94).

The Beijing Economic Technologies Institute is is cooperating with Bayer Health Care Ltd. (SZ 07/19/95, p.32) concentrating on well-known Bayer medications, emulsions and diagnostic slips. Till 2000, turnover of 70 mil $ is expected (FAZ 03/26/96, p.23).

On of 12 Hoechst JV is the (51%) International Pharmaceutical Factory Shanghai (Hoechst Shanghai International Pharmaceutical Ltd. producing the analgetic agent metamizol (15 mil. $ total investment, FAZ 03/09/96, p. 22).

After starting quite late with vitamin productions in 1992, Roche and Sunve will be prodcuing cancer therapeutics, antibiotics and coronary drugs. A "National Research Center for Biotechnology and Genetics Research" shall be built in Zhangjiang (Shanghai, HB 10/11/96, p.21).

Boehringer Ingelheim (60%) and Shanghai Sino Pharmaceutical Group Ltd. Have set up a JV (25 mil $) for producing and packing pharmaceuticals (HB 01/11/96, p. 17) producing aerosols and and ampullae (FAZ 01/22/96, p.24). Boehringer Ingelheim bought stocks (9.16% for 70 mil $) from Japanese SS Pharmaceuticals and made an turnover of 400 mil $ in Japan in 1994 (HB 04/01/96, p.16).

Johnson & Johnson cooperated with Shanghai Jahwa Corporation, China's largest cosmetics facturer in 1990-93. Then a new oral care, baby and feminine hygiene products and most recently haert devices were successfully launched as WFOE (Vanhonacker 1997:131).

Merck KgA Darmstadt puts 30 mil $ into Merck Beijing Pharmaceuticals (HB 04/24/97, p.13). Rhone-Poulenc (pharmaceuticals) has offices in Nanchang (animal health) and Shenyang.

Degussa (Bielefeld-Kuensebeck) is setting up in methionine JV (animal nutrition) in zibo or Anshan, N China.

Vitamins: Lonza (60%) planned to set up a niacinamid production JV with a 3,400t/a (30 mil $) output (FAZ 11/21/95, p. 22). Roche (50%) planned to set up a vitamin A production with the Shanghai No. 6 Pharmaceutical Factory and a vitamin E production with the Sunve Corporation for animals (FAZ 11/30/95, p.25). This has been realized with 70% and 60% JV (HB 04/03/96, p.13). According to later reports, vitamins A and B were to be produced (investment: 50 mil $, annual output 200 mil $, FAZ 04/01/96, p. 14). Plans to enter vitamin C market (state-controlled, HB 10/11/96, p.21) BASF (70%) and North East General Pharmaceutical Company (Shenyang) announce JV (plants for 10 mil $) for vitamin A, B1, D3 and E production (HB 06/20/95, p.21) for animal nutrition (FAZ 06/20/95, p. 18). Another JV (60%) with Shanghai New Asiatic Pharmaceuticals producing Vitamin B6 (HB 12/24/96, p.10). Cheap vitamin C productions from China forces BASF to reduce size of Danish vitamin plant (FAZ 02/19/96, p.16).

Bayer plans to set up animal health in production in Sichuan (C& I 07/96).

2.4. Energy
The BDAG (Ratingen, 75%) and the heat exchanger company Zhangjiakou Metalurgical Oxygen Generator Parts Plant sign JV (10 mil. $, HB 04/12/95, p.23).
2.4.1. Renewable energies
China needs to increase investment to renewable energies (Byrne 1996). Enercon (Aurich) in Germany has 30% of wind technologies and is also exporting to India (500 MW in the last years). AN-machine construction and the Danish Bonus company are selling wind energy to China (Hemmelskamp 1995).
3. Social impact of investments & company strategies
Public concern about the safety of diaminotoluene production (educt for polyurethane factore) expressed by Minjindang members such as Hong Chichang and up to 2000 other protestors in Taichong (Taiwan) in autumn 1996 have been settled by public auditing and environmental reassessment by autumn 1997. Hong Kong is another tiger where growing environmental awareness has generated another stage for green marketing (Martinsons 1996).
3.1. Sponsoring universities
Bayer sponsors courses at Beijing University of Chemical Technology and the China Europe Intenraitonal Business School in Shanghai (C&I 07/96).
4. Journal article references
Of great value are parts of the China Chemical Week (Zhongguo Huagong Zhoubao, autumn 1996-spring 1997)
FAZ is Frankfurter Allgemeine Zeitung
HB is Handelsblatt
SZ is Sueddeutsche Zeitung
Bryne-J 1996, The challenge of sustainability: balancing China's energy, economic and environmental growth, Energy Policy 24(5)455-462
Hemmelskamp-J 1995, Vom Winde gedreht, EU-Magazin 12,37-38
Martinsons-MG 1996, Technology transfer for sustainable development: environmentalism and entrepreneurship in Hong Kong, Int. J. Social Econ. 23(9)69-96
Vanhonacker-W 1997, Entering China: an unconventional approach, Harvard Business Review, March-Apr. 130-140
Ye-QL 1994, Fertilizer demand in China's reforming economy, Can. J. Agricultural Economics 42:191-207

5. Company and institutional addresses

CHEMISTRY: HUMAN RESOURCES: CHEMICALS: BIOTECH: COSMETICS & WASHING INGREDIENTS:
BREWERIES & FOOD: PHARMA: ENGINEERING: CONSULTING: OTHER INDUSTRIES: TRADE: CULTURE: