China trends help Lanxess to achieve robust growth

German specialty chemicals company Lanxess' efforts to align itself with the China market trends are paying off.

Its China unit reported nearly 30 percent sales growth in 2017. Its regional CEO expects to generate greater returns in the coming years by paying heed to the Chinese government's call for high-quality development.

"In fiscal year 2017, Lanxess China continued strong performance, accounting for 13 percent of our global sales. As a German company rooted also in China, Lanxess is harvesting from its long-term commitment to the Chinese market," said Ming Cheng Chien, CEO of Lanxess' local arm.

According to him, China's strategies for green transportation, people-oriented urbanization, low-carbon sustainable development and high-quality growth are a perfect match for Lanxess' motto to produce quality work and products.

"We saw growth in all of our business sectors (in China) - automotive, construction, pharmaceutical and agri chemicals. This year, China will continue to be one of the engines for Lanxess' global business growth," said Chien.

In his opinion, China's supply-side reform as well as the government's proactive management of environmental protection and safety have created huge business opportunities.

Many small, uncompetitive enterprises are likely to close as China pursues high-quality growth and industrial upgrading.

Chien believes such transition will leave large sustainable corporations like Lanxess in a favorable position.

The German company saw its global sales in 2017 surge 25.5 percent to 9.66 billion euros ($11.93 billion), with Asia-Pacific accounting for 28 percent.

China's contribution towards the company's global sales has increased from 7 percent in 2005 to current 13 percent. During the same period, its sales revenue surged 165 percent from 472 million euros to 1.25 billion euros.

"We follow Chinese market trends closely. On May 5, 2017, we witnessed the first successful flight of China-made C919 large aircraft using Lanxess lubricant additives, and on March 14 this year, we launched ground-breaking new high-performance plastics factory in Changzhou in Jiangsu province.

"This should reflect our confidence in China's rapidly developing new energy automotive and electrical and electronic industries," Chien said.

During an earlier interview with China Daily, Matthias Zachert, chairman of Lanxess, said China and North America are two markets that will likely see the strongest Lanxess growth in the coming five years. And that growth will be achieved through organic investments as well as acquisitions.

Zachert expected China to account for more than 20 percent of Lanxess' global sales in 10 years.

Among all the promising sectors, China's rapidly developing new energy automotive segment, as well as electrical and electronic industries, are expected to create huge market potential.

Earlier in March, the Cologne-based company started the construction of its high-performance plastics plant in Changzhou, which is tailor-made for the automotive sector and the electrical and electronics industries.

With an investment of 20 million euros, the plant has a capacity of up to 25,000 metric tons high-tech plastics annually. It is expected to start production in the second quarter of 2019.

Lanxess already operates a high-performance plastics plant in Wuxi in Jiangsu province. Chien said the new plant is not the final investment the company is making in this sector.

According to Lanxess studies, China accounted for a quarter of the about 85 million cars sold around the world in 2017, and this figure is expected to become one-third in 2025. In addition, it is also projected that the annual growth of the electrical and electronics industries in China will hit 9 percent.

In terms of motor vehicles, China manufactured 29.02 million units and sold 28.88 million units in 2017, up 3.19 percent and 3.04 percent respectively. This helped China to emerge as the world's largest automobile market for the ninth year in a row, according to data from the China Association of Automobile Manufacturers.