BASF to boost operations in region
Global chemicals giant sets aside €10 billion investment to meet market competition
Global chemicals giant BASF plans to invest €10 billion (HK$101 billion) on production and research facilities in the Asia-Pacific by 2020 to help achieve its goal to double sales.
The company, based in Germany, has seen two years of lower profits amid more competition.
To become more competitive, it plans to produce more products domestically to save transport costs and become more responsive to customers' needs. It also aims to save €1 billion by improving operational efficiency and organisational effectiveness.
"[The local players] learn over time from Western firms and they have improved on quality and reliability," deputy chairman Martin Brudermuller said. "It is not astonishing that they try to catch up and create an impact in the market."
BASF's Asia-Pacific sales grew at an annual average of 14 per cent in the past eight years to €14.9 billion, but earnings before interest, taxes, depreciation and amortisation rose a slower 11 per cent to €1.4 billion, after falling from €1.6 billion in 2011 and €1.7 billion in 2010.
Brudermuller said its mainland rivals had become more competitive as they had been induced by Beijing's policies to upgrade their innovation capacity.