German chemical giant BASF opens vast China complex

German chemical titan BASF officially opened a giant, 8.7 billion euro ($10 billion) production complex in China Thursday, a major but controversial expansion in the world's number two economy.

The complex in Zhanjiang, Guandong province, sprawls over an area of about four square kilometres (1.5 square miles) and brings together numerous plants producing a vast array of chemicals.

It is the biggest ever investment project by BASF, which has long insisted that expanding in China, the world's biggest chemical market, is necessary to ensure its future prospects.

"China remains the market offering the greatest growth for our industry," BASF CEO Markus Kamieth said in an interview with the Handelsblatt financial daily this week.

"The strong focus on new industries, renewables, and the green transition is a huge opportunity for an innovative chemical company like BASF."

The greater focus on Asia comes with Germany's crucial chemical sector in crisis as it battles high energy costs, red tape and fierce competition, in particular from Chinese producers.

But the Chinese project has proven controversial at a time that the world's biggest chemical company has embarked on a major cost-cutting drive in its home market.

BASF has been axing jobs at its historic site of Ludwigshafen in southwest Germany, and announced in February that it planned to cut back-office jobs in Berlin and shift them to India.

There have also been concerns about boosting investments in Communist Party-ruled China, particularly after Berlin urged companies to "de-risk" from the country by diversifying into other markets.

Analysts have questioned whether the investment will pay off -- the Chinese economy is facing a long slowdown and there is already overcapacity in the market.

Over 2,000 people are employed at the Zhanjiang site, which will produce a range of chemicals for sectors ranging from transport to consumer goods and electronics.

Most of the products manufactured at the site are intended for customers in China.

It is BASF's third-biggest complex worldwide, after Ludwigshafen and Antwerp in Belgium. 

AFP