The sky`s the limit
South East China is booming and European companies are leading from the front

The economic upsurge in South East China always strikes the same three awesome notes: the impressive development that’s already been achieved, the extent of the current developments and how much room is left for future plans. It’s equally valid for businesses such as specialist chemicals manufacturer or automation supplier.

Low cloud billows to and fro among the office tower blocks. The humidity literally condenses on the skin. Down below the clouds, on the wet streets of the apparently endless city, industrious activity is everywhere. If ever human organization resembled the constant busyness of an ant colony, it’s here in Shanghai. But a good hour’s drive away, there’s a striking contrast for the visitor. At the gigantic Shanghai Chemical Industry Park (SCIP) located at the coastal edge of the metropolis with 17 million inhabitants, people appear few and far between and the park has lots of unused spaces. But these spaces reflect the aspiration packed into this market of the future: no investor arrives without immediately booking space by the square kilometer for future production facilities.

It was less than ten years ago that Bayer, BASF and BP were in at the start. Now nearly 70 businesses from all over the world are manufacturing around the Hangzhou Bay area and are currently investing more than nine billion dollars. Also in the fray is Degussa, a specialist chemicals producer. The german company was already looking to move in close on the growing Asian markets as early as the 80s. However, the company waited until 2004 to commence production in Shanghai. Only in the last two years have a polyester and a dye plant been established at SCIP, which were opened in the spring of this year, and currently undergoing preparation for production startup is a manufacturing plant for organic peroxides. This strategy—with further growth designed-in right from the start—is known as the “Multi User Site” strategy. This concept starts with centrally-situated service facilities, around which Degussa’s individual Business Unit plants are located. In addition to the 160,000m2 already developed, Degussa owns a leasing option on a total of 600,000m2.
So it’s no wonder that the next cohort of workers are already lined up in the starting blocks, ready to add their efforts to Shanghai’s colony of industry, with an additional polyester plant and a compounding plant for other types of special plastics coming online by January 2008. Degussa is just one of many global players in the chemicals business on this park. A SCIP neighbor who has had a similarly eventful summer and can expect an equally busy future is Bayer Material Science, who is also casting an unhurried eye over the available space for its upcoming projects.
What’s happening in terms of skyscrapers and chemical locations in Central Shanghai is equally jaw-dropping on the edge of the city. In the 16 km-distant Shanghai Zizhu Science-Based Industrial Park—which by Chinese standards counts as extremely close—the architects are drawing up future developments with exactly the same design plan: plenty already built, still more being planned and then endless space for further expansion. The spaces will accommodate two universities with 60,000 students, gigantic housing estates and hundreds of businesses. So far, 33 companies have moved in, such as Microsoft, National Nanotechnology Research Center and biotech companies such as GeneTech.
Localized intelligence
One of those who already benefit from the Industrial Park’s infrastructure is measuring systems manufacturer, Endress + Hauser. The medium-sized company that hails from where three countries meet at Basle had already been around in China long before Shanghai was what it has now become and long before the first dam was raised in the SCIP to protect the land from the sea to create industrial estates. However, E+H’s current position doesn’t compare with their crazy times in the 80s and especially in the 90s. The Swiss have restructured, with the sales staff now based at the Zizhu Industrial Park and their production at Suzhou, 100 km to the West and well-situated for logistics. Since September 19, 2006, the characteristic blue products have carried the label “Made in China”, a symbol of their local partnership. In 1994, the company had a turnover of s6 million and ten years later this had grown to s50 million. With the boost of a new local production site, this is expected to reach s100 million by 2010. The production halls in Suzhou are designed for the assembly of the equipment to be produced here: the 7850 m2 of floor space currently in use still has available space, and even the 22,000m2 of real estate has space for further growth. Three production centers of the E+H Group will move into the new builds: the plant at Maulburg which houses the level and pressure measurement divisions; E+H Conducta in Gerlingen which specializes in fluids analysis, as well as E+H Wetzer in Nesselwang, a center of excellence for temperature measuring. All three will share buildings and infrastructure.
Daunting distances
The staff at the new factory in Suzhou will assemble, test and calibrate the measuring systems—every single one tailored to the requirements and wishes of the customer. The core production components will be supplied by Endress+Hauser’s main European plants. Heavy-duty parts such as stainless steel pipes, rods and flanges will increasingly be sourced from local markets. “We’re eliminating long transport distances and complicated customs formalities,” explains Matthias Altendorf, “so we’ll be able to serve our customers in China—and later on in other countries in the Asia/Pacific region—even better.” “The Chinese market is enormous—both in terms of the volumes but also the distances that have to be overcome,” stresses Wilfried Meissner, head of E+H’s Nesselwang subsidiary. In spite of the rapid growth over the past few years, China is still only at the starting line in terms of automation technology development. Chemicals and petrochemicals, oil and gas, power generation and the raw materials industry are all important sectors. “But environmental technology, and in particular the water and sewage industries, is also becoming increasingly significant,” comments Dr. Wolfgang Babel, CEO of Endress+Hauser Conducta, reflecting on the current five-year-plan for China, in which environmental protection plays a heightened role.
The focus is still on home
For Klaus Endress, the new plant in Suzhou is part of a comprehensive strategy, driving forward the development of the whole company to secure lasting success. The company chief is very well aware that many at home will look at a new development of this kind and be anxious about their own jobs. That’s why he never tires of emphasizing the fact that these latest investments also serve to strengthen their domestic plants: “We’re investing in growth markets but we’re also strengthening our home bases. We’re here to be close to the customer, to learn from them and to exploit shorter logistic distances,” says Endress. That’s why continuous expansion of the production centers in Germany, France and Switzerland is very much part of the picture as well. “For Maulberg alone, we are talking about an investment of more than s19 million,” adds CEO Matthias Altendorf. And so that no-one is eclipsed by the plans for China, the announcement has now been made that Endress+Hauser will soon have secured land in both Gerlingen and Nesselwang to allow for further growth at these production sites as well. The boom in China certainly appears to be having a lasting impact.