Further investment in a growing market

How many leather facilities does Bayer have in China? Bayer have established one manufacturing facility for leather and textile chemicals at Wuxi, some 150km north-east of Shanghai. Production is furthermore supported by a marketing structure with offices in Beijing, Shanghai, Chengdu, Guangzhou, Hong Kong and Taipei on Taiwan. How important will China become in the future? Greater China is the second largest market in terms of sales in the Asia-Pacific region for Bayer. The country has in recent years become an investment focus for the company, who have large expansion plans in the Shanghai Chemical Industrial Park in Caojing, south of Shanghai. This reflects our confidence in the growth potential of this ever-expanding market. As for leather production, China has developed into the largest market for the leather processing industry worldwide; we believe that this development will continue. It is particularly worth mentioning that the quality of leather manufactured in China has significantly improved over the past few years and that the industry nowadays is capable of manufacturing all kinds of leather products including upholstery/furniture leather. What percentage of Bayer's total worldwide leather chemical production is in China? With manufacturing sites in almost all continents, Bayer have shown that presence in the market, including production and R&D facilities, is a key element in the company's marketing strategy. It is our aim to focus on our customers and to be close to them. Bayer produce a huge range of leather chemicals. While Bayer do not produce the entire range of their leather chemicals in China, they manufacture, to a large extent, highly specialised products for the leather industry. On a quantitative scale, this represents a rather small volume of Bayer's total chemicals for leather, but in terms of quality production, Wuxi delivers outstanding results. What percentage of Bayer's total worldwide leather chemical sales is in China? Our current sales in China represent roughly 15% of our worldwide sales. Needless to say that this percentage has increased significantly over the past couple of years and is expected to grow further. We have set ourselves the ambitious target of gaining a market share in excess of 20% in the mid-term, which will be supported by the continuous shift of leather production to China. What percentage of Bayer's production in China is leather chemicals? Bayer are present in China with their entire range of products from the four business sectors: healthcare, crop science, polymers and chemicals. So far, Bayer have set up ten joint ventures and four wholly-owned subsidiaries in China, ten of which operate local production facilities. Among them is Bayer Wuxi Leather Chemicals Co Ltd (BWL) who manufacture a total of 9,000 tons of chemicals per year. With total yearly sales of Bayer in China of more than e1 billion, mostly from high-volume plastics, leather chemicals retain a small but profitable proportion of sales. In the production of their leather chemicals, do Bayer import their raw materials or use local products from China? Bayer make on-going efforts to use locally-manufactured raw materials where available in the necessary quality. Based on the pace with which the Chinese chemical industry is developing and enhancing its efforts for production control and quality management, the company will strive to procure locally. In cases where this is not possible, BWL continue to rely on imports of raw materials in order to maintain the needed stability of quality and product performance. Why is the Chinese leather industry so important to Bayer? The Chinese leather industry is currently the largest worldwide and we see this trend continuing. A future development may be a very gradual trans-location of the industry to other Asian countries as well. In the mid-term, China will continue to be important for Bayer due to the size of the country's leather industry. Are there plans to open any more leather facilities in China? Bayer is always interested in expansion if the opportunity arises. At the moment, however, we are confident that as far as production sites are concerned, our current plant has sufficient potential for expansion if needed so that we currently have no plans to open another production site. Facilities such as application laboratories in key-areas are certainly considered if and when required. How do Bayer differentiate themselves from their competitors in China? Bayer have traditionally been a reliable supplier to the leather industry worldwide, mainly due to excellence in product quality, technical know-how and service. These pillars of success have to be maintained and strengthened. As mentioned before, high product quality is imperitive for Bayer and the company strive to achieve this by using high quality raw materials, either locally available once thoroughly tested and approved, or imported if not available in the necessary quality locally. What do you see as the most difficult aspects of production in and trade with China? Without any doubt the sheer size of the country, the population and the increasing need to have products available in the shortest possible time will be the biggest challenge in the years to come. In terms of trade with China, it is important that trade barriers have increasingly fallen and we expect this to continue. A factor that creates major problems is the fact that China is currently in a transition phase with regard to trade, investment and production. In many cases, a legal system, which regulates the relationship between producer, buyer or investor, still needs to be defined. China is in the process of adapting to WTO law in its own legal framework, but this framework at the moment leaves room for interpretation of regularities, which in the future need to be further defined to ensure safety in planning business in China. Do you have any links or ties with any universities in China? Bayer sponsor vocational training, continuing education projects and scientific research. The most recent example of cooperation in education is the framework agreement Bayer signed with the vocational school Shanghai Petrochemical Academy to create a joint education model based on the German model of dual education. With regard to joint research, Bayer cooperate with the Chinese Academy of Sciences to further academic exchange in research and development. The company have, moreover, provided funds to set up a Chair of Research and Development at Tongji University in Shanghai and they also support the University for Chemical Process Technology in Beijing. Further research projects in China are carried out in the life sciences field at the Hong Kong University of Science and Technology, the Materia Medica Institute in Beijing and the Kunming Institute of Botany. As to the leather chemicals sector, Bayer established an annual scholarship with the Leather College at the North-China University in Xian where outstanding students are granted an award and receive extensive training on-site at BWL. Is BWL the most important of Bayer's leather facilities in Asia? BWL is one of two manufacturing facilities for leather and textile auxiliaries in Asia. With its regional training centre, which services the whole of Asia-Pacific stretching from Pakistan to New Zealand, the development and customising of new products and processes is a key focus of the development. When was Bayer Wuxi established? The manufacturing facility at BWL was planned and established 4-6 years ago with comprehensive installations for the synthesis of retanning products. Production began in June 1998, but in recent years and with the rapid advances of BWL in the leather industry in China, the company have been constantly investing in additional facilities and processes to improve their product range and service levels. The research centre at BWL and the regional training facilities on site enable Bayer to keep close contact with their customers. Cooperation with customers has led to an increasing number of products being developed at BWL in coordination and with support from our experts at Bayer in Leverkusen. Do you produce the whole range of chemicals from beamhouse through to finishing? BWL is a manufacturing site for chemicals, including down-stream synthesis of leather chemicals. As such and with respect to the responsibility of Bayer for health, safety and the environment, the facilities are state-of-the-art and have been built according to the same stringent standards that apply to all other worldwide plants of Bayer. The portfolio of BWL initially started with mainly beamhouse and retanning products, but rapidly developed into custom-adapted high-end systems in finishing and top-coat applications. Does Bayer Wuxi just supply leather chemicals for China or do you distribute to other Asian countries? BWL is located strategically in the centre of today's leather processing industry in China. As such, China is the main market with some 75% share; one quarter of BWL's products is exported mostly to the Asia-Pacific region. Who is the managing director? How many people work at BWL? Dr Melzer is the general manager of the company. A total of about 100 employees work at BWL. The staff is constantly trained in the technical as well administrative areas, establishing a team spirit with common goals for the company development. As such, the role of the managing director becomes that of an internal coach - retaining the communications channels to Bayer's organisation in Asia-Pacific and their head-office in Germany. Of the 100 employees who work at BWL, the leather producing side commands the majority of these staff. In addition, a larger number of employees are supporting the production site in sales and marketing as well as logistics with offices in Hong Kong, Singapore and other major locations in Asia. How many tons of leather chemicals are produced per month? With a present capacity close to 1,000 tons per month, staff work a four-shift system on a 24/7 basis. How are the chemicals distributed to the tanners? There is a large number of tanneries listed in the industry registry. BWL and Bayer coordinate access to all major accounts. Based on the location of the tannery and its business environment, dealers are also appointed and become involved in servicing these accounts. What kind of leather making equipment is located in Wuxi? The chemical laboratory, as well as our regional application and training centre on-site, is furbished with all main equipment required to process sides - starting from wet-blue. Due to the increasing importance of this facility and the larger range of applications and training, we are presently undergoing an expansion of the facility. Is there a research and development facility or a pilot plant there? The research facility is equipped for a scale-up of development products up to 100kg for large-scale application testing at the customer's production line and under real production conditions. Usually, the next steps are first production runs in a smaller 1m³ vessel before being handed over to production for large-scale processes. Will any research work be carried out at Wuxi or will this remain in Germany? Experts from Bayer in Germany regularly visit customers in China as well as our facilities at BWL. As such, the exchange of product ideas, customer processes and market development is very intense and has proven extremely successful. These exchanges cross-fertilise the development in both regions and from a different angle of viewing trends and developments.