BASF is implementing its global "We create chemistry" strategy in Asia Pacific with a set of ambitious targets and a focus on sustainability.
To achieve sales of _25 billion to customers in the region by 2020, BASF's Asia Pacific strategy "grow smartly" outlines investments of _10 billion, around 9,000 new jobs, and annual savings of _1 billion. Around 25 percent of BASF's global R&D will be conducted in Asia Pacific by 2020, to develop innovative solutions that address the region's challenges of resource efficiency, food and nutrition, and quality of life.
"In the next decade, Asia Pacific will face huge challenges while remaining the fastest growing market for the chemical industry. With our Asia Pacific strategy, we are positioning BASF as the leading provider of sustainable solutions for the Asia Pacific region," said Dr. Martin Brudermüller, Vice Chairman of the Board of Executive Directors of BASF SE, responsible for Asia Pacific. "Based on our strong global R&D network, we will considerably strengthen our innovation capabilities in Asia Pacific, enabling us to better serve our customers in all industries in the region."
Grow two percentage points above regional chemical production
BASF estimates the cumulative annual growth rate (CAGR) for real chemical production through 2020 for Asia Pacific at 6.2 percent, well above the world average of 4 percent. According to its strategy, BASF intends to grow profitably at least two percentage points above regional chemical production to achieve sales of _25 billion in Asia Pacific by 2020.
BASF will collaborate with customers in focus markets to provide solutions for applications such as low-carbon construction, advanced pharmaceutical production, environmentally-friendly coatings, more sustainable packaging, energy-efficient vehicles, renewable energy, and solutions for less resource-intensive agriculture.
BASF will conduct around one quarter of its global research activities from Asia Pacific. By 2020, BASF plans to reach a total of around 3,500 R&D personnel in the region, up from around 800 in 2012. BASF is also establishing research facilities in the areas of electronic materials, battery materials, agriculture, catalysis, mining, water treatment, polymers and minerals. Following the successful inauguration of the BASF Innovation Campus Asia Pacific in Shanghai, China, the company is currently considering establishing a second Innovation Campus Asia Pacific. More than _2 billion in regional sales will be achieved through new business and acquisitions by 2020.
BASF's growth and contribution to Asia Pacific will also develop together with changing economies and demographics. The company will provide solutions for the needs of the emerging middle class forming the "base of the pyramid" through solutions for affordable mass housing, food fortification, wind energy, and water purification. Additionally, BASF will explore untapped markets in Mongolia, Laos, Myanmar, and Cambodia.
Investments for local production
By 2020, BASF aims for local production of approximately 75 percent of the products it sells in the Asia Pacific region in order to intensify its collaboration with and strengthen its supply position to customers in Asia Pacific. At the same time, local production improves resource efficiency by reducing the transportation needed for imports and exports, and by enhancing energy and raw material efficiency through highly-integrated production systems close to customers.
To achieve this, BASF plans to invest _10 billion together with its partners by 2020 to further develop its local production footprint in Asia Pacific. BASF currently operates more than 100 production sites in the Asia Pacific region, including two highly-integrated "Verbund" sites, located in Kuantan, Malaysia, and Nanjing, China.
BASF will invest in a range of efficiency measures that will save approximately _1 billion annually by 2020. These measures include the expansion of BASF's regional technical and engineering procurement hub, which enhances local procurement to reduce costs from transportation, improve quality, and speed up investment schedules.
Form the best team
Further development of a robust employee base in Asia Pacific is crucial to BASF's long-term success in the region. Taking advantage of the growing talent base in the region, BASF will create around 9,000 value-adding employment opportunities by 2020, thereof a major part in production. The company will establish the first programs of its global Learning Campus in Asia Pacific, including a facility in Singapore focusing on regional talent development activities as well as providing a hub for learning innovation.
As a core part of its strategy, BASF also aims to contribute to the social development of communities in its operating neighborhood. This includes partnerships for responsible investment, transparency in reporting, and engagement with society.