Chemical company from Switzerland finds growth formula

Specialty chemicals supplier Clariant Ltd will pick up its pace of investing in China amid projections of surging demand for plastic materials during the nation's latest round of urbanization.

The Swiss firm will build a Ceridust production facility in Zhenjiang, in East China's Jiangsu province, to serve the agriculture, packaging and automotive industries, said Christian Kohlpaintner, a member of the company's executive committee.

"The plant design will allow future expansion, depending on market development. We expect to build the plant on our existing site in Zhenjiang, making use of its good logistics and proximity to markets," he told a news conference in Shanghai.

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Clariant regards serving the local market as the key to the future growth of plastic resin production due to relatively lower consumption per capita compared with matured economies. Major growth areas for the specialty chemicals sector are in emerging regions, primarily China, where average annual volume growth rates of 8.4 percent are forecast through 2017, according to information provider iHS.

By acquiring the organic pigment business of Jiangsu Multicolor Fine Chemical Co Ltd in China, Clariant intends to build a world-scale PV23 pigment plant in Zhejiang, when the business unit has doubled its marketing and sales staff to foster the aggressive growth plans.

Claiming 11 percent of global revenue, China sales grew by 7.3 percent year-on-year, reaching 4.5 billion yuan ($725.8 million) in 2013. The firm has four business areas: care chemicals, catalysis and energy, natural resources, and plastics and coatings.

Kohlpaintner identified the last segment as the most promising area, since it represents 42 percent of overall sales and 40 percent of profits. The sector has achieved above-average growth in emerging markets and some end-user pigments segments, while it saw global leadership in non-halogenated flame retardants, according to global CEO Hariolf Kottmann.

To strengthen its presence, Clariant is expanding the capacity of its Guangzhou plant. It also is developing a product application center in Shanghai.

China is expected to account for 60 percent of the industry's growth over the next decade, iHS data showed. In terms of plastics, China is the largest producer and consumer in the world.

Jan Kreibaum, regional head of Clariant China, said a primary growth driver is localizing production through innovation, development and production. "For example, about 80 percent of products that we develop and produce in China are sold to the local market to serve local needs. Local technical centers are dedicated to providing real-time, customized services to our local customers in ways that an overseas support center simply cannot easily do," he said.