InterviewRhodia steps up investments in China

19 March 2008 22:09  [Source: ICIS news]

By Doris de Guzman


NEW YORK (ICIS news)--French chemical producer Rhodia is looking for more capacity investments and even acquisitions in China, CEO Jean-Pierre Clamadieu said on Wednesday.


“We think that if you want to be successful, you’d better be producing in China,” Clamadieu told ICIS news in an interview.  


Rhodia expected China to become the world’s largest chemical market in less than 10 years, with a growth rate of 8.4%/year between 2003 and 2015, he said.  


China’s share in global chemical production would increase from 13% in 2003 to 22% in 2015, with global production estimated to reach €1,900bn ($3,000bn) by then, Clamadieu said.


While not excluding acquisitions, Rhodia currently thinks that organic growth may be the more effective way to grow its business in China, he said.


More than half of the company’s growth capital expenditures would be committed to China in the next few years, Clamadieu said.


Rhodia's recent investments in China include an engineering plastics plant in Shanghai; application laboratories for silica and rare earths in Shanghai and Qingdao; a new diphenols plant in Zhenjiang opened in November last year; and a new highly dispersible silicas plant in Qingdao, which will start in 2009.


Some of the major challenges in developing capacity in China include access to raw materials, finding and investing in the right people, and making sure that the company’s intellectual property is protected, according to Clamadieu.


“If companies are not careful in China, they might end up with some issues, but for Rhodia, we have quite a long experience in China and have already taken the right steps to overcome these challenges,” he said.


Beyond new facilities, he said the company has also invested in the region’s human resources with more than 95% of its middle and top management being Chinese.


Clamadieu declined to comment on China’s share of the company’s overall sales but noted that both Brazil and China represented 42% of sales last year.


“Our next target is to reach 50% of sales and we can probably reach this target within a 3-5 year timeframe,” he added.


($1 = €0.64)


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By: Doris de Guzman
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