Specialty chemicals Chinese market

BASF reportedly expects demand for chemicals in China to double from 2002 to 2015 - and the share of specialty chemicals needed for that region to increase sharply. The company estimates that specialty chemicals will grow to 35 percent of the total Chinese chemical market by 2015. 

European specialty chemicals are in an advantageons position since their products are usually not made to specification. In other words they offer tailor-made solutions for customers. Products like specialty chemicals, which contain a strong service component, are not as prone to local competition, since local companies tend to lack prerequisites. Since domestic mannfactnrers in many cases do not fully satisfy the quality standards reqrrired for exports, foreign companies have good opportunities in this market althongh Chinese competitors will try to improve their competitive position by increasing their... 

As in the case of specialty chemicals, fine chemical multinationals with a global reach are likely to become partners of choice for their multinational customers. However, in selected market segments, European custom synthesis or building blocks suppliers face aggressive competition from China as their Chinese competitors are in a superior cost position for the following reasons ... 

Tomas Koch of McKinsey uses the specialty chemical market as an example Chinese producers increasingly supply the multinational companies that are moving plants [into China] and then dropping their traditional suppliers. They switch almost as soon as an adequate local source becomes available... Since rising imports to meet growing domestic demand will eventually draw Chinese entrepreneurs with low cost bases into the market for just about all chemicals, any decision to serve the country from faraway plants may be risky. ... 

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