A Closer Look on Made in China 2025 New Ways in the Far East: What Made-in-China 2025 Means for Petrochemicals and Chemicals

Author / Editor: Dominik Stephan* / Dominik Stephan

China is stepping up the pace — By 2025, China wants to play a leading role in terms of innovation, sustainability and networking. The ambitious plan will be a challenge particularly for chemical and petrochemical companies. What solutions does the concept “Made in China 2025” offer for an industry at the crossroads? And how can companies prepare for the future?

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Major plant engineering and construction projects in China 2016 (Source: Groab.net)
Major plant engineering and construction projects in China 2016 (Source: Groab.net)
(Picture: Picture: BASF; © Utir/Fotolia.com)

China under transformation: The old model of fast and cheap has its limitations, the economic growth is declining and the demographic change has reached People’s Republic.

But at the same time new, innovative players are pushing into global markets. Now the PR’s political leadership wants to align with the next generation of industry: The new 13th five year plan makes innovation, networking and smart production an obligation.

Big Doesn't Mean Strong...

“Big doesn’t mean strong”, explains Pan Aihua, director of the raw materials industry department in the Chinese Ministry of Trade and Industry, the dilemma of the country’s economy — China is the most important revenue driver for chemicals with a market volume of more than one trillion Euros.

However, the industry once so accustomed to success is faltering: The growth of the Chinese chemicals companies was “only” 9.5 percent in 2015. Gone are the times of double-digit growth rates. After three years of declining prices, consolidation is the name of the game.

With China pushing into a new era of industrialisation, chemicals and petrochemicals are especially affected. While the size of the sector is enormous, innovation ability, efficiency and integration is not quite often not on-par with the global competition. Can the ‘Made in China 2025’ herald a new dawn for Asia’s chemical and petrochemical industry? Discover more in our online whitepaper What the New Era of Made-in-China 2025 means for Petrochemicals and Chemicals

For a decade and a half, China was the global growth engine with cheap mass-produced goods, joint-ventures with the international industry elites and world-scale greenfield projects. However, the strategy of the boom years has reached its limits. The country is now searching for new ways but major players stay the same: Firms like Petro China, Sinopec, CNOO and other state oil companies dominate petro- and basic chemicals production while chemical top dogs like Sinochem and Chem China are public firms. This direct line to Beijing was an important success factor in the boom years, but can China be more than just “big”?

More Versatile than Thought

Actually, China is much more versatile than it seems: More than 33,000 companies produce chemicals in the People’s Republic. However, many of the smaller firms work on the verge of profitability.

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To make matters worse, a recent AT Kearny study shows that big companies profit from better access to raw materials, simpler financing and faster approval procedures. Aihua brings up another issue: “Our innovative ability cannot keep up with the global competition. Also, the integration of digital solutions in industrial processes or the implementation of ‘green’ technology is not enough.”