Giving the green light in a boom market
Bayer is investing heavily at the Caojing chemical park

The high growth Asia/Pacific economies will continue to run at full tilt for the foreseeable future. Growth rates
of eight percent provide an excellent climate for Bayer’s current investment at China’s first chemical park.

In describing the challenges of the high-growth Chinese economy, Dr. Hagen Noerenberg, Chief Executive of Bayer Polymers and designated Chairman of the Board at Bayer Material Science AG, revealed that if you want to be successful in China, you have give due consideration to six factors. You must take an entrepreneurial approach, have a local presence, be flexible, be customer-focused, be visible and be attractive. This approach appears to have served Bayer well in the past, and the company now intends to increase its level of commitment. It is not surprising that Bayer decided to locate China’s first integrated chemical park (Shanghai Chemical Industry Park – SCIP) at Caojing. Shanghai and the surrounding region are seen as the driving force behind China’s enormous growth goals. “This is where it is happening”, explained Bayer Chief Executive Werner Wenning with reference to the micro and macro economic environment in China and in Shanghai in particular.
Largest single investment
in China
The company is investing around $ 450 million alone in a state-of-the-art, world-scale manufacturing complex for the production of macrolon. This is the single biggest investment to date in the People’s Republic of China. Production is expected to begin in the second quarter of 2006. From then on, total capacity will increase from an initial 100,000 tons per year to 200,000 tons per year as the market develops. In addition to Baytown, Antwerp and Uerdingen, Bayer will then have two macrolon production sites in Asia (Map Ta Phut, Thailand, and Caojing, China). According to Wenning, the forecast growth rate for polycarbonate up to 2006 justifies the investment. The current worldwide growth rate is 12 percent, and experts anticipate that the growth rate in China will be 18 percent. Based on the dynamic pace of development which is sustainable at this level in the long term, Bayer plans to invest around $ 3.1 billion at the Caojing integrated production site. Some $ 1.8 billion of this has been included as a firm item in the budget for construction of polymer production facilities, and the company has already started to move into the implementation phase. An additional $ 800 million will be invested at a later time. The company plans to raise another $ 500 million on the stock market in 2005 for its NewCo startup.

In addition to polycarbonate production, Bayer is planning two other large projects in Caojing on a site that has a total size of 1.5 square kilometers. Wenning explained that the company plans to build production facilities for polyisocyanate and an intermediate product, which will make the site Bayer’s main base for paint raw materials in the region. Other significant investments will include world-scale facilities to produce the polyurethane raw materials MDI (diphenylmethane diisocyanate) with an annual capacity of 230,000 tons by 2008 and TDI (toluylene diisocyanate) with an annual capacity of 160,000 tons by 2009. The MDI project will run in two phases. During phase one, a manufacturing facility for the production of polymeric and monomeric MDI from MDI compounds will be built along with a logistics facility. Then in phase two, facilities to produce MDI compounds will be constructed by 2008. During the transition phase,
the BASF/Huntsman joint venture will supply MDI from the facility in the nearby Shanghai chemical park which will have been completed by then.

Excellent conditions
for investment
Bayer management rates investment conditions at the new 29 square kilometer chemical park as excellent. Bayer facility manager Michael König told PROCESS worldwide that cost is one aspect which should not be underestimated. It will cost about 30 percent less to construct the facilities in China while still maintaining Bayer standards. Only a few days after the foundation stone was laid in Caojing, Bayer Polymers dedicated another world-scale TDA production facility in Dormagen. TDA is an intermediate product used to make TDI. Annual TDA production capacity at the German site will be 200,000 tons. This is another clear indication of Bayer’s world-scale strategy, which the company intends to consistently follow in the future to reinforce its goal of being a worldwide technology and cost leader.kib