View on Chinese Chemical Industry from Distance    
By N. S. Venkataraman  

Those involved in activities relating to global chemical industry cannot but recognize that China is now rapidly emerging to attain the leadership position in the global chemical industry. At this pace of growth in China, it is only a question of time before China would beat out European countries and even USA in its performance and growth, not only in quantitative terms but also in terms of the range of chemical products produced and quality specification.
   The first thing that one would notice in chemical industries in China that is in sharp contrast with the chemical industries in other countries in the world is the aggressive marketing strategies. If one would send ten enquiries for buying a product to chemical industries in China and another ten enquiries to chemical industries in other parts of the world including Western Europe and the US, in all probability, the response within three days from chemical industries in China would be eight out of ten and the response from the chemical industries from other parts of the world would be two out of ten. This speaks volume about the vitality and dynamism of the chemical project managers in China.   
   While it was said earlier that the quality specification of chemicals produced in China were not competitive compared to the chemicals made in developed countries and this was true to a large extent in the past, this is no more the scenario today. There have been substantial improvements in the specification and grades of chemical products produced in China not only with regard to the bulk chemicals but also with regard to specialty chemicals. The range of specialty chemicals produced in China has also increased substantially. This is mainly due to the fact that the Chinese chemical industries have been immensely benefited by the huge investments by multinational chemical companies in China and the great alacrity with which the native chemical industries in China have adopted and absorbed such technologies.
   The investments in research and development activities in China and the interaction between technical academic bodies and industries have been steadily increasing. There have been many instances in recent times of successful cooperation between industries and universities in developing technologies and implementing chemical projects. This is one significant factor that has contributed to the process of fine tuning the operations of chemical industries in the country.  
   Of course, the rapid investments and setting up of chemical projects have resulted in the fall in safety standards in some chemical industries, which is reflected by the number of accidents taking place in the chemical industries particularly those operating at medium scale level. The environmental issues also remain to be sorted out as many industries have been accused of not conforming to the ecological stipulations. But, there is evidence that the government of China is now implementing vigorous steps to enforce safety and environmental standards and this is bound to have positive impact before long. As a matter of fact, it is expected that such strict implementation of safety and eco standards would only help in strengthening the base and structure of the chemical industries in the country, making them more competitive in the global market.  
   In recent times, several countries including Western Europe and USA are implementing antidumping measures against the Chinese goods which only indicates the fact as to how strongly Chinese chemical industries have emerged in the global market. Many countries think that their native chemical industries have to be protected against "the Chinese invasion", which in effect is a recognition of the "alarming pace" of growth of Chinese chemical industries.
   It is still a puzzle for the executives in chemical industries all over the world as to how China is able to offer several chemical products at such low price. Many seem to be now realizing that such highly competitive price factors for chemicals from China are not due to mere Government support and fiscal incentives but are due to stronger fundamental factors. Certainly, chemical industries in China are making money by volume sales and their aggressive marketing approach largely help them in this task.
    It is also necessary to keep in mind that the chemical industries in China are not simply following the pattern of growth of developed countries. For example, they have not given up the coal based chemical projects fearing environmental issues.  They have capitalized enormously on their strength of large geographical size, huge population and consequent "consumption power" in China itself, different climatic conditions, huge availability of variety of natural resources and of course the availability of natural gas.
    Finally, a strong central government in China and labor laws that are not strictly democratic have ensured peace in the industrial front where the focus of everyone stays on ensuring production at optimum possible level for them. The chemical industry in the rest of the world has to watch the chemical industry in China over powering it before long.

    * N. S. Venkataraman is a chemical engineer and Director of Nandini consultancy Centre Pvt. Ltd., India/Singapore, providing market research services to chemical industries all over the world. nsvenkat@md4.vsnl.net.in