BASF continue to focus on China20 March 2006
Leather chemicals have been a core business for BASF since 1898. To add to this, BASF have now been active in the Chinese leather industry for around 50 years and are among the top three suppliers of leather chemicals in China.
In 1996, BASF established production of leather chemicals in Shanghai alongside their main sales and marketing operation. In 2000, the Asia Technical Centre for Leather (ATCL) was also established at the same location, making Shanghai the consolidated headquarters for Performance Chemicals for Leather in China. On October 16, 2005, Joachim Henkmann took over as head of Performance Chemicals for Leather for the whole Greater China area. Henkmann is no stranger to Shanghai, having previously served as senior manager for marketing pigments between 1994 and 1999. He is glad to be back and reconfirmed to Leather International that PR China is the most important market for BASF leather industry products. A great many people would agree with Henkmann when he says he bases his confidence on the fact that China's leather industry is expected to grow faster than the global average. The driving force continues to be the demand for shoes but automotive leather production, today by far the smallest segment, is expected to grow exponentially in the medium term.
The growing Chinese middle class have aspirations, one of which is to take to the roads in cars, preferably featuring leather interiors. They appreciate luxury and status and cars are very much in this category, as is leather. The car industry is all set to take off in a big way.
BASF's Asia Technical Centre for Leather (ATCL) comprises a fully equipped and air-conditioned pilot plant covering wet-end as well as finishing. There is also a chilled room for wet-blue and raw hide storage plus laboratories for quality control, both physical and chemical testing and R&D. There are 25 employees at the centre with a cumulative technical experience of 150 years.
Investment is ongoing with laboratory expansions to accommodate further product developments and the installation of additional testing equipment. The Weatherometer will be part of climate testing in a room with temperature and humidity control so that testing conditions can be constant in whatever country a laboratory is set up. Another piece of new equipment is the Japanese Gakushin for automotive leather testing. When Leather International visited the site in September, 2005, BASF were about to upgrade physical and chemical test equipment to improve testing for cold crack, the presence of formaldehyde and chrome IV, and fogging etc.
They are also enhancing dyestuff matching systems to enable quick and accurate prediction of colour shades on crust leather.
ATCL offers technical support and innovation along with training through symposiums, workshops and customer events. They also provide customer trials, testing and in-house support.
In 2005, ATCL organised regional symposiums covering the beamhouse, wet-end and finishing with separate emphasis on shoe upper leather and furniture and upholstery leather. Greater China events included distributor technical training for both shoe upper and automotive leathers; road shows; product launches and promotion.
Customer events included technical training for customers/distributors from Japan and for the Japan Tanners' Association. There has also been a customer symposium for Thailand and there are around 8-10 other customer specific events per year.
The ATCL describes itself as 'facilitator and coordinator for all technical activities in Asia-Pacific' and is involved in value chain management from shoe upper to automotive with regional and local product development that requires test marketing and product launches. They also take technical responsibility for trade fairs in the region.
More than 100 customers are currently being serviced in the Asia Pacific region with more than 50% in the Greater China area. They also cover other important markets in the region including Korea, India, Thailand, Japan, Pakistan and Australia. At one time, ATCL was based in Malaysia but it was relocated in 2000 to be closer to the market.
Service support for all articles and processes breaks down as 50% for finishing and 50% for wet-end processing including beamhouse. ATCL is the only part of the Shanghai site of BASF Auxiliary Chemicals Company (BACC) which consists of eight production lines with different technologies and full use of technology transfer from BASF AG, Ludwigshafen, Germany. The manufacturing capacity is 65,000 tons/year and there was a 40% production increase in 2004.
Beyond production, sales and technical service to the leather industry, BASF are also active in an other area: the 'well-being' of the industry in general.
The leather chemicals team has formed a university cooperation under which six Chinese university graduates undertake a two-year training programme and a further six Chinese students attend a BASF internship programme.This will cover all aspects of business including logistics, production, product management, product development processes, quality control, physical and chemical testing, sales order processing and more. 'If we ultimately help provide trained personnel to any part of the leather industry, we would have achieved our objective', says Roar Solberg, head of ATCL.
With the competence of the Shanghai facility, the widespread reach of the technical personnel and an established distribution network, BASF leather chemicals are well positioned to meet the challenges of the Chinese market.
At the opening of the Nanjing facility, Dr Andreas Kreimeyer member of the board of executive directors of BASF AG, responsible for Asia, said: 'Our strategy is to be where our customers are. Thus we increasingly need to be in Asia and particularly in China'.
Greater China represents 36% of BASF's Asian business and 5% of the global business. By 2015, BASF aim to achieve almost 50% of their Asian business in the Greater China area. By 2010 the aim is to:
* Achieve 10% of BASF global sales and earnings in the chemical business in China
* Maintain or establish a leading position among the five strongest players in strategically relevant markets
* Achieve 70% of sales from locally produced products
* Establish the best team in industry
To achieve this, they have invested €2 billion in China from 2001-2005.
Their biggest investment to date forms part of the Nanjing Chemical Industry Park (NCIP). In April 2003, the Chinese central government approved the establishment of the park and at 45km
2, NCIP will be the biggest chemical industry park in China. In comparison, the Shanghai Chemical Industry Park is around 30km 2 and the BASF site in Ludwigshafen 7km 2.
* The leather industry in Greater China is expected to grow faster than the global average
* While it is expected that there will be a slow down in the establishment of new tanneries, currently less than 10% of existing tanneries produce more than one million m 2/year, accounting for nearly 30% of total production in Greater China
* Tanneries expect intensive technical service
* The geographic location of tanneries is along the Chinese coast with more than 60% of leather production concentrated in five provinces. For the most part, these are small-to-medium sized tanneries with a 'craftsman' structure
* There is increasing awareness by local governments regarding environmental issues
* The driving force for the industry continues to be the demand for shoes
* Increased growth in the automotive leather segment
* There is an ongoing high demand for imported raw hides
At BACC Shanghai, an assortment of 120 products are manufactured for five different industries. The declared aim is for quality which equals BASF global standards and matches customer needs. Productivity has shown a rapid upward curve with a 300% improvement since start-up in 1997. There has been a 70% improvement since 2001.
On the subject of health and safety, they are proud of their record, with zero downtime due to accident or injury. Safety training and emergency drills are held twice a year and there is a safety knowledge examination for all operators.
BACC started life as a joint-venture with Shanghai Dyestuff Company but has been an independent entity since 2000. With constant growth and investment, BACC now believe they are continuing this period of growth when all their hard work will come to fruition. They are not about to rest on their laurels and ongoing projects will see:
* Enlargement of the polymerisation line by 10,000 tons
* Introduction of new technology for tanning agents