Covestro to increase localization efforts in China

Covestro AG, the German manufacturer of polymers, plans to further increase its localization efforts in the Asia Pacific region, particularly in China, with ongoing investments under a region-for-region approach, said a company executive.

The German company launched the production of a partially bio-based raw material for coatings, widely used in construction and infrastructure applications, in its plant in Foshan, Guangdong province last month, following a launch in Europe during the third quarter, aiming to reduce delivery times and ensure a stable supply for customers in the Asia-Pacific region seeking sustainable solutions.

"We will continue to invest in the country to provide our customers with innovative and sustainable solutions and products. Our focus will be on sectors with strong future demand, such as automotive, construction, photovoltaic and advanced manufacturing, and packaging sectors," said Thomas Roemer, Covestro's head of business entity for coatings and adhesives.

The company already locally produces about three-quarters of its products sold in the coatings and adhesives industry across Asia Pacific, he added.

In the third quarter of last year, Covestro completed a new production facility for water-based polyurethane dispersions at its integrated site in Shanghai, to cater to the increasing demand for more sustainable coatings and adhesives across various industries, including automotive, construction, furniture, footwear and packaging.

The growing demand for electric vehicles and sustainable construction in China presents global chemical manufacturers with lucrative opportunities to supply advanced materials for vehicle assembly and emissions reduction, said Roemer.

Optimistic about the Chinese market, Covestro plans to direct 75 percent of its investment in the Asia-Pacific region to China over the next three years, Roemer said.

For example, Covestro is currently building its largest site for thermoplastic polyurethane - a versatile material known for its exceptional properties, making it a preferred choice in various applications across multiple industries in Zhuhai, Guangdong province.

Viewing China as crucial to its global business strategy, Roemer said that apart from supplying products to domestic customers, the company also exports chemical materials manufactured in its China plants to Asian countries such as India, Japan, Vietnam and Indonesia.

The Leverkusen, Germany-headquartered company to date has invested more than 4 billion euros ($4.23 billion) in China, which accounts for about 20 percent of its global sales.

As many multinational corporations are restructuring their global manufacturing bases and supply chain networks amid the current complex geopolitical landscape, Roemer stressed that Covestro firmly supports fair, open and rule-based global trade. Punitive tariffs and protectionist measures can have significant negative impacts on business and the broader economic environment.

"We will continuously monitor global trade dynamics and have an effective risk management system in place, supported by our region-for-region approach," he noted.