ChemChina: Leadership throughout the Global Economic Crisis       

China National Chemical Corporation (ChemChina) is a large-scale state-owned company approved by the State Council on the basis of China National Bluestar (Group) Corporation (Bluestar), China National Haohua Chemical (Group) Corporation (Haohua or CHC) and other companies affiliated with the former Ministry of Chemical Industry. Headquartered in Beijing, ChemChina was formally inaugurated in May 2004, and administrated by the State-owned Assets Supervision and Administration Commission (SASAC) of the State Council of China.
   ChemChina has 9 specialized companies include China National BlueStar (Group) Corporation, China Haohua Chemical (Group) Corporation (CHC), ChemChina Agrochemical Corporation, and China National Chemical Information Center (CNCIC), etc. It is the holding company of ten-plus A-share listed companies, including BlueStar Cleaning (SZ: 000598), Star New Materials (SH: 600299), Shenyang Chemical (SZ: 000698), Sanonda (SZ: 000553), Cangzhou Dahua (SH: 600230), and etc.
    There are currently six sectors in ChemChina industries: advanced chemical materials and specialty chemicals, oil processing and chemical raw materials, agrochemicals, chlor-alkali chemicals, rubber processing and rubbers & plastics equipment and science and R&D sector.

Retrospection   

2009 marks the fifth anniversary of the founding of ChemChina. The company has enjoyed a rollercoaster ride of development and consolidation in the past five years. Its total assets increased from RMB22.96 billion to RMB156.9 billion while its prime operating revenue jumped from RMB15.2 billion to RMB122.6 billion, rising by 6.9 and 8 times respectively since founding. Meanwhile, the total profits have grown almost a dozenfold. To date, ChemChina ranked 19th amongst the top 100 chemical companies in the world, 28th among the top 500 Chinese companies and No.1 among all the Chinese producers of chemical raw materials and chemical products.
   ChemChina also have surmounted numerous difficulties and scale record-breaking heights. During the past five years, the company has focused on strengthening its core businesses and raised RMB32.3 billion to complete 85 key new construction projects. It adhered to the strategy of internationalization and successfully acquired four overseas businesses, including Adisseo in France, Qenos in Australia and the organic silicone business of Rhodia in France. Then, ChemChina integrated the acquired businesses with the company's existing businesses in advanced chemical materials. The company additionally introduced, into BlueStar, strategic investment from US-based Blackstone through a process of overall restructuring. It has persevered in scientific and technological innovation, and has more than 600 research findings passed authentication checks, of which 148 won provincial or state-level awards for scientific progression. To date, ChemChina ranked the 4th among all the SASAC enterprises in terms of the number of patents owned.
   "While accumulating valuable development experience, we also come across many difficulties and have to face new and tougher challenges. For instance, compared to global leading chemical producers, who generally have no more than four business units, ChemChina, in spite of its painstaking restructuring efforts, still has six business units, which makes us obviously over-stretched. In terms of IT construction, an over-complex human resource structure and the shortage of skilled personnel have proved to be the bottleneck for management transformation. Safe production and environmental protection have historically been weak for us, and we still have a long way to go to meet the objective of energy conservation and pollution reduction," said Ren Jianxin, General Manager of ChemChina.
   He also confessed that the sudden onslaught of the financial crisis presents yet another challenge for the company. The prices of its subordinates' products are falling, facilities are running at half capacity or closed temporarily and plants are struggling to break even.

Development orientations    

A global crisis of this magnitude is not only a tough test of the resilience of the company, it also promotes changes in the industry.
   Commercialization of technological progress and the deepening of the division of labor constitute the driving force for the global economy. However, today when the workshops like China are running at full steam and nearly two decades after western consumerism, typically represented by the US, began to prevail. The world is suffering dearly from the imbalance between real and virtual economies, sluggish market demands and lack of traction. Until now there has been no obvious strong point of economic growth capable of contributing to wide scale employment and active consumption.
   Yet, he believes that the world economy, once emerging from this crisis, will find new sources of growth.
   "This is because there will never be an end to human consumption," said Ren, "to seize the initiative and survive further, intensified competition in the post-crisis era will depend on company's ability to forecast trends and adjust its future development accordingly. Every crisis creates opportunities for economic restructuring. Therefore, I believe, the best strategy for us is to avail ourselves of the favorable conditions and accept and embrace the opportunity that now stands before us."
   Ren believed that the major sources of economic growth for China, a late developer in the process of industrialization and urbanization, are likely to be the safety, environmental protection, energy consumption and pollution reduction businesses. In tandem with this, related life sciences, environment sciences and material science sectors will be the focus for further industrial expansion. In line with the new growth point of the world economy, these three areas are also where the future of the global chemical industry lies.
   Thus, he said, ChemChina will position the basic chemical business as the company's foundation, fully tapping the potential of life sciences, material science and environment science to form the "3 plus 1" industrial pattern in the forthcoming 12th Five-Year Program (2011 - 2015). With a strong focus on these sectors, the company will speed up the restructuring of its business composition and seek to exploit its differentiation as a late-comer by seizing the opportunities of the global shift in production and IT-based management transformation.
   ChemChina proposed slogan that 2009 is the year of innovation, showing the company's commitment to seeking change and combative measures amidst difficulties, whilst defining its orientation for the post-crisis era. This demarcation entails innovation in organization, institutions and technologies involving changes in their way of thinking, philosophies and production technologies and processes, Ren explained. It essentially requires effective leadership in a crisis to provide impetus and create an underpinning for a successful corporate transformation.

Specific strategies   

The US-based Boston Consulting Group (BCG) recognizes ChemChina as one of the 2008 BCG 100 New Global Challengers for its ambition and vision to go global through learning and adapting rapidly to new business models in a fast-growing market. However, to be worthy of that citation, ChemChina's managers at all levels, Ren said, should meet three major challenges on top of sound operational management, enhanced cost control and market growth.
   He