Focus Asia. Asian boom! Shanghai by night.
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1 Asian boom! Shanghai by night. 6
2 Innovation from tradition BASF has been in Asia for 110 years / Plastics achieve their highest sales in Asia 7
3 Everything at BASF started with dyes: in the 19th century, labels had to be as colorful as possible. The construction of BASF s Verbund site in Nanjing, China (2003). The steamcracker built there has a capacity of 600,000 tons. ài lì sè It was with these characters that BASF entered the Asian market in The man who loves decency is what these characters mean and, back then, they were chosen to translate the name A. Ehlers. This was the name of the company that first came to represent BASF in Shanghai, China, in 1885 and that sold mainly BASF dyes. Back then, BASF was just twenty years old, but it already recognized the opportunities that Asia had to offer. Even today, BASF can still identify with : BASF continues to stand for soundness and reliability, which are both elements of decency. Great innovative capacity and interaction with customers based on partnership this is the key to our success. Today as well as in the past, explains Dr. Martin Brudermüller, member of BASF s Board of Executive Directors and responsible for the business with plastics and for the Asia-Pacific region (more on this in the interview, page 12). The very first production facility that BASF built in Asia was a plant in Yokkaichi, Japan, to produce Styropor, which had just been developed. The plant went into operation in 1963: at that time, people in Japan realized that there was a huge market for this white foam for packaging fresh fish. Number of employees in Asia rises by 30 percent In 2008, 123 years after its first beginnings in Shanghai, BASF recorded sales of 9.3 billion euros in Asia, 28 percent of which came from plastics. The importance of Asia for BASF can be seen in the Asia-Pacific Strategy 2020, where it says that BASF is planning to invest two billion euros in the region by A large portion of these investments is earmarked for the plastics business. For instance, we intend to build a 400,000-ton plant for MDI, an intermediate for polyurethane, in Chongqing, China, explains Brudermüller. About 15,000 employees currently work in the Asia-Pacific region, which also includes Australia and New Zealand. At least another 5000 employees will be hired by Asia is booming and the economic crisis has not changed this. Europe and the United States are still the driving force of the global economy. A comparison can illustrate this: the GDP of the European Union is about U.S.$18.4 billion, that of the United States is U.S.$14 billion and that of China is U.S.$4.4 billion. But countries like China and India are catching up fast. Nowhere else in the world are the growth rates of the domestic markets so high since hardly anywhere else is there such a pentup demand for consumer goods. More and more often, the innovations come from Asia In 2009, for example, people in India and China ordered 60 percent more flat-screen TVs made by the South Korean manufacturer LG Display and the number of cars sold in China rose by 16 percent. Asian companies are at the forefront when it comes to technologies of the future. Chinese factories already produce 30 percent of all the solar collectors used in the world and they are leaders in the production of lithium-ion batteries used for electric cars. In the coming years, China plans to invest U.S.$1.6 billion in the development of alternative fuels while, at the same time, the amount of energy har- 8
4 An employee at the acrylate plant in Kuantan, Malaysia. vested from wind farms in China will double. The future-oriented Tata Nano from India has demonstrated how affordable mobility can be achieved. The dynamics in China are incredible and work is done at breakneck speed, raves Frank Reil, Senior Manager Asia Pacific, Technical Marketing. At the same time, there is still an enormous backlog demand for plastics in automotive construction in China, India and even in Japan. This applies especially to engineering plastics such as polyamide, which have to withstand extreme loads in the engine compartment. It is precisely in these demanding applications that BASF can come to the fore with its high level of technical expertise. Automobile industry the driving force for BASF plastics In Korea, the first Ultramid intake manifold was installed in a Hyundai Excel already in 1995, with Japan following in 1996 with a plastic intake manifold for the Toyota Mark 2. In Europe, each car contains about 20 kg of polyamide. In Korean cars, this figure is 15 kg, and in Japan it is 8 kg, while in Chinese cars, it is just 5 kg, explains Reil. For BASF experts, the amount of polyamide found in the engine compartment is a measure of how advanced a particular plastics market is. The technical performance of a plastic used in the engine compartment is extremely important: if an intake manifold or stabilizer made of polyamide does not do its job, then the entire car no longer works. This is why the development of a component for the engine compartment is particularly laborious and demanding. When a company decides to undertake such a time consuming and cost intensive development step, then it can be assumed that it is also high time for other companies to welcome other innovative and technically sophisticated solutions in plastic. In other words, wherever there is a market for intake manifolds or stabilizers made of Ultramid, there will soon be new opportunities for BASF s highly specialized plastics. This is why BASF is now offering innovative instruments such as ULTRASIM, a computer-assisted component development method, directly in Asia. Weight-reducing plastics in the engine compartment are indispensible for small, fuel-efficient vehicles. This is why Tata is installing an intake manifold made of Ultramid in the Nano. The cooperation between BASF and Tata is not limited to polyamide: BASF specialists have developed a new catalytic converter that drastically reduces the emission of pollutants from the exhaust fumes; the coating of the Nano and the polyurethane used for the seats are also from BASF. Innovative products, services and efficient processes are especially important in order to support a project like the Nano, explains Hermann Althoff, in charge of managing the cooperation with the Asian automotive industry. Plastics save energy and slash emissions The rising demand for plastics in cars is a global trend. In 2020, plastics will account for 25 percent of the weight of a car, to the benefit of the environment: each kilogram that is saved in the manufacture of a car alleviates the burden on the environment by 25 kg of carbon dioxide in the form of exhaust fumes over its entire service life. BASF plastics used for the insulation of buildings save energy in the construction sector. BASF foams help to keep a house warm or cool, depending on the climate zone. For this purpose, BASF offers Neopor, Styropor and Peripor as well as several types of polyurethane in Asia (in this context, see the article on the passive-house study on page 16). Worldwide, a large portion of the primary energy generated is needed to heat private homes. In Germany, for example, one-third of the energy is used for this purpose, accounting for more than 20 liters of heating oil per 9
5 The number of BASF employees working in research & development in Asia is going be doubled. square meter per year in a multi-family old dwelling. This has consequences, not only for the occupants, since their heating costs keep going up as the price of raw materials rises, but also for the environment, since heating generates considerable amounts of the greenhouse gas carbon dioxide (CO 2 ). The same applies when it comes to cooling a house: in a wellinsulated house, the energy consumed by air conditioners to cool and remove moisture from the air is reduced by up to 50 percent. Saving energy is a top priority for many Asian nations. China, for instance, approved a five-year plan in 2008 stipulating that energy efficiency has to be raised by 65 percent. With two billion square meters of living space constructed in China every year and 40 billion square meters in need of renovation there is great potential for environmentally sound insulation.
6 BASF showcases energy-efficient solutions for urban living of the future at Germany s promenade in Nanjing, China. BASF built a three-liter house in Yongin (Korea) in 2005, showcasing not only stateof-the-art thermal-insulation technology but also additional innovations such as special window systems and room ventilation systems aimed at CO 2 reduction. In comparison to a similar conventional house, the 3-liter house in Korea reduces CO 2 emissions and energy consumption by about 80 percent, explains ChungMin Ha, responsible, among other things, for the marketing of Neopor in Korea saw the exemplary renovation of a 5-story residential building in Shanghai, converting it into a low-energy building. Neopor, the expandable polystyrene (EPS), played a crucial role in both of these projects. This material, which is a refinement of Styropor, accounts for a 20 percent higher insulating effect, even though the panels have the same density and thickness. Neopor s outstanding insulating properties and the associated energy saving potential earned it the Energy Award for Green Building of the Korean Consumer Protection Association (CACPK) in 2006 in Korea. Changes in consumption patterns influence packaging Another focal point of BASF s activities in Asia is the packaging sector. In this market, BASF sells polystyrene, Styropor for packaging products such as household appliances, also polyamide and Ecoflex and Ecovio, BASF s biodegradable plastic for films. The higher the level of urbanization in the Asian countries, the more purchases are made in supermarkets, reports JaeYoung Lim, in charge of the Asian Ultramid customers (PA) in the sector of film extrusion. Goods in supermarkets have to be packaged in a different way than the goods at a farmers market. This is where our Ultramid comes into action. This BASF polyamide is an integral part of multilayered films used for packaging meat and sausages. It is very transparent and imparts good barrier properties to the film. Lim goes on to say, BASF anticipates large sales increases in this market. The catchword Bio is used as a sales pitch among consumers in Asia as well. Ecoflex and Ecovio, BASF s two biodegradable plastics, benefit from this. In Thailand, for instance, we have recently been working with the German Association for Technical Cooperation in a project aimed at introducing Ecoflex bags for composting biodegradable waste, says Ross Kung, Product Manager for Biopolymers. Mulching films that can be plowed under and are used in agriculture are another target segment for biodegradable plastics. Anyone who uses cell phones, computers or entertainment electronics notices on a daily basis that most communication and electronic devices are made in Asia. When it comes to computers and the like, BASF has a lot to offer, especially in the realm of styrene-based plastics such as polystyrene, ABS (Terluran ), SAN (Luran ) and MABS (Terlux ). Almost 90 percent of BASF sales in this market are in Asia. LG, for example, uses the high-gloss Terluran for its flatscreen TVs. Be it for cars or computers, for thermal insulation or plastic films, BASF not only wants to produce its plastics on site but also to develop new projects with customers directly in Asia. For this reason, we are going to more than double the number of employees working in research and development in Asia, explains Brudermüller of the Board of Executive Directors. The number of system houses for polyurethanes and the applications technology centers for engineering plastics has been growing steadily for quite some time. Brudermüller elaborates, Our concept for the future calls for cost-efficient production on site and for developments from Asia for Asia. 11
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