Covestro goes online to sell polymers in China

Covestro AG, a German producer of high-tech polymers, is tapping e-commerce on an experimental basis in China.

The China market is the single largest contributor to Covestro's global sales. The company, formerly known as Bayer Material Science, expects to boost its total global sales via online channels to 1 billion euros ($1.17 billion), by the end of 2019, said Markus Steilemann, its CEO.

Polymers are used in a wide range of industries to enrich raw materials used to produce products.

"We have great opportunities in terms of development here in China, particularly in e-commerce, because this is a market still very experimental, where customers love to try new things."

Steilemann said consumers in China are very curious. "That exactly fits Covestro's mindset and DNA ... and is also helping develop new products and e-commerce opportunities. That's why we think we have a very good opportunity in China to develop things ... and that's why we have decided to launch a web shop here."

Covestro launched an online store on Chinese internet giant Alibaba's online platform 1688 in April.

By offering high-tech polymer materials, including high-tech material polycarbonate and preproducts for polyurethane foams, coatings and adhesives, the web shop hopes to reach new customers in China who might be already buying from other shops on 1688.

"We did not consider other countries for this particular venture. We didn't want to partner with another large B2B or B2C platform anywhere else because we thought the conditions to start and conditions to experiment are better here than in any other large market that we have."

The Covestro online store on 1688 is not chasing big revenues. Instead, it is deepening its understanding of potential customers in China, Steilemann said.

China's online shopping trade volume is projected to reach 6.1 trillion yuan ($888 billion) by this year, up nearly 30 percent year-on-year, according to iResearch data.

An iResearch report showed revenue from Chinese small and medium-sized B2B platforms totaled 29.17 billion yuan in 2017, representing 17.5 percent year-on-year growth.

The e-shop in China is in line with Covestro's new e-commerce strategy. The company has already built its own e-commerce platform.

E-commerce is one of the largest and greatest business opportunities for the entire chemical industry, and Covestro is among those that adopted the e-channel route early, Steilemann said.

"We have some customers who now choose services and products via this platform. They receive promotional offers for products they need but are not aware of. It works exactly like Alibaba, but just that the environment is exclusively for the chemical products."

In 2017, Covestro generated 3.1 billion euros in revenue from the China market, or 22 percent of its global revenue. Since 2001, it has invested more than 3 billion euros in China.