Engaging in Growing and Emerging Markets
Clariant engages in growing and emerging markets, particularly in China and India. These markets enhance Clariant’s global growth potential. Oxford Economics forecasts that the nominal USD 2021–2025 CAGR for the specialty chemicals sector will be 5.8 %, with 3.9 % in advanced economies, but 7.0 % in China and 10.3 % in India. Clariant also plans to allocate more capital expenditure to growing regions – like Asia and North America – in the years up to 2025.
By engaging in growing and emerging markets, Clariant develops deeper customer relationships on a global basis. Greater global market penetration also helps to innovate in accordance with local customer needs and to outcompete local rivals.
Clariant’s customers in India and China are located in various steps of the value chain: Business Unit Catalysts sells mainly to base chemical and polymer producers. As China and India enhance their domestic production capacities, Clariant catalysts will be in great demand there. Business AreaBusiness AreaFor the financial reporting, Clariant grouped its businesses in three core Business Areas: Care Chemicals, Catalysis, and Natural Resources. Care Chemicals sells largely to producers of consumer applications. Business AreaBusiness AreaFor the financial reporting, Clariant grouped its businesses in three core Business Areas: Care Chemicals, Catalysis, and Natural Resources. Natural Resources helps industrial customers to meet changing consumer demands, for example, with adsorbents for edible oil purification.
In 2021, Clariant’s sales in Asia remained resilient and grew by 16 % in local currency. However, the company recorded notable growth in India and China (16 % in local currency). Sales in China alone amounted to CHF 479 million, which represented approximately 10 % of Clariant’s global continuing business sales. To meet this demand, ten out of 67 Clariant production sites are now located in China. Latin America also increased revenues by 16 % in local currency. Following the positive trend of the other regions already mentioned, Middle East and Africa grew by 19 %.
Management approach
Clariant’s Strategic Management ProcessStrategic Management ProcessClariant’s Strategic Management Process (SMP) is conducted by the business units in collaboration with Corporate Planning & Strategy. The SMP ensures that Group-level as well as businessunit-level strategy development is an iterative process that addresses the relevant megatrends observed by Clariant. addresses global growth and capital expenditures for four main regions: APAC (Asia-Pacific), EMEA (Europe, Middle East, and Africa), LATAM (Latin America), and NORAM (North America). In addition, all business units develop strategic business plans that address objectives and specific strategic initiatives for these four regions and for China in particular. Also, each business unit management committee – except Business Unit Oil and Mining Services – has one representative with responsibility for China.
Clariant applies a differentiated steering approach to allocate capital, innovation, human resources, and M&A to businesses with an attractive market outlook. This means investing in areas where the company is already strong or closing gaps where Clariant aims to improve its position.
China
Already today, China accounts for about 35 % of the global specialty chemical market. Also, 50 % of the global growth for specialty chemicals in the next five years is expected to come from China.
Clariant conducts profitable business in China and experienced strong growth rates with a high single-digit annual average over the last five years. The company plans to grow further and expand its footprint in China in order to outgrow the market.
An increasing share of Clariant’s products for the Chinese is produced domestically. Given the company’s strategic investments in Chinese capacities, this share is expected to grow even further. At the same time, the share of Clariant products produced and exported from China has remained at around 25 % over the last five years.
The company is determined to become a »China insider,« using its understanding of local market and customer needs for local innovation and local decision-making. Clariant offers solutions that are not easy to copy, and sells specialties with limited local competition, like catalysts and green surfactants. For more commoditized products, for example, in the pigments business, competition in China is very intense with high pressure on margins.
Sustainability policy in China
With the fourteenth five-year plan (2021–25) and related policy announcements, China has raised its level of sustainability in chemicals significantly. The country now plans to achieve carbon neutrality by 2060. Therefore, it enhances investments in carbon emission reduction, especially in energy supply and mobility. There is a significant customer pull for sustainable solutions for a smaller carbon footprint. This entails huge growth potential for Clariant, for example, for next-generation catalysts that diminish the production of carbon dioxide.
China has also established a nationwide mandate for a share of renewable ethanol in transportation fuels. The Business Line Biofuels & Derivatives profits from the ensuing demand for advanced biofuels with its low-emission product sunliquid®.
Finally, China’s environmental policy aims to move chemical production sites to specialized zones with a shared centralized wastewater and hazardous waste treatment infrastructure. Off-gas and wastewater standards in China are often stricter than in Europe or the US. Clariant welcomes strict laws and their execution to avoid competitive disadvantages. It is an early adaptor of high standards and sees its efforts rewarded when all competitors must comply with strict legislation.
Business framework in China
The legal and regulatory environment in China has become more favorable in terms of acquisitions. For example, it is no longer mandatory for foreign companies to establish a joint venture structure. China even promotes fair competition between domestic and foreign enterprises and protects the interests and rights of enterprises with foreign investment. In 2021, Clariant sold about evenly to multinationals and domestic companies in China.
Since the 2014 free trade agreement between China and Switzerland, the protection of Clariant’s intellectual property in China has improved gradually. China has issued a number of intellectual property law updates and reached a new level for infringement penalties.
Clariant has an excellent reputation in China in terms of sustainability, innovation, and corporate citizenship. The company is committed to plastic recycling along its value chain and to advocacy for its EcoCircle initiative with sustainable products, solutions, and partnerships. These efforts earned Clariant the 2020 China GoldenBee CSR Award and helped the company to attract young Chinese talents.
Projects in China
The new One Clariant Campus in Shanghai is one of Clariant’s major projects in China. Inaugurated in 2021, it is an integrated operational headquarters in the region, an innovation facility to strengthen Clariant’s position in the country, and a chance to enhance the company’s market position. The facility combines technological knowledge and local support. It has already played a key role in the development of products for the local market, for example, sustainable additive solutions for China’s growing plastics, coatings, and adhesives industry.
To meet emissions regulations, Clariant also collaborated with Jiangsu Jinneng, a specialist in volatile organic compound (VOC) abatement technology in Zibo, Shandong province. The phthalic anhydride plant of Shandong Qilu Plasticizers Co. Ltd. uses Clariant’s EnviCat® VOC catalyst to purify production off-gases, thereby removing 99 % or more of VOCs and carbon moNOxide.
Clariant is also building a new production facility for CATOFIN® catalysts in Jiaxing, Zhejiang province. The plant will address the strong growth in the propane hydrogenation market in this region. It is the most digitized Clariant facility to date, using sophisticated automation systems throughout the production process.
Clariant also opened a joint venture production facility with Beijing Tiangang Auxiliary Co. Ltd. in Cangzhou, Hebei province, in 2021. This world-class facility fulfills the growing demand of Chinese growth industries, such as the automotive, textiles, and coatings industries, for high-end process and light stabilizer additives.
At the end of 2021, Clariant started construction work on a flame retardant production facility at its existing site in Daya Bay, Huizhou, Guangdong province. This will allow Clariant to respond to the rapidly growing demand from the Chinese electrical and electronic equipment industries, particularly with respect to e-mobility, 5G communications technology, and transportation. By establishing local production capacities for its innovative and sustainable Exolit® OP range of flame retardants, Clariant significantly reduces time-to-market.
In 2021, Clariant rolled out its energy efficiency program eWATCH™ to all sites in China to institutionalize its high standards for energy conservation. The comprehensive program analyzes energy consumption across operations and identifies cost-saving opportunities.
India
Clariant is committed to supporting its Indian customers with the complete range of its product portfolio. This commitment is well in line with the governmental initiatives »Make in India« and »Self-reliant India.« Clariant is confident that it can contribute to the rapidly growing local market in India by establishing two joint ventures: Clariant IGL Specialty Chemicals Private Limited and the catalyst joint venture with SCIL.
Sustainability policy in India
India has a positive mandate for blending bioethanol in gasoline. However, the country has no surplus crops for this application. Therefore, Clariant sees market potential for its sunliquid® technology, which uses agricultural waste as a feedstock.
Projects in India
In 2021, Clariant established a 51 %/49 % joint venture with India Glycols Limited under the name of Clariant IGL Specialty Chemicals Private Limited. It produces and markets ethoxylates based on ethylene oxide from bioethanol. They meet the diversified needs of various end-use industries, for example, the textile, pharmaceutical, personal care, emulsion polymerization, paint, detergent, automotive, and agrochemical industries.
This joint venture gives Clariant a strong position in the Indian ethoxylate market, and turns the company into one of the leaders in the global market for green ethylene oxide derivatives and bio-based ethoxylates for home and personal care.
India Glycols will contribute its renewable bio-ethylene oxide derivative business. This includes a multipurpose production facility with an alkoxylation plant in Kashipur, Uttarakhand. Clariant will contribute its local Industrial and Consumer Specialties business in India, Sri Lanka, Bangladesh, and Nepal, as well as a payment of a mid-double-digit million amount. Like this, the joint venture allows Clariant technology to be leveraged with low-cost manufacturing.
Clariant expects the collaboration to deliver profitable growth in the next few years. For the 2021 financial year, the company expects an incremental addition of around CHF 50 million to the top line of Business AreaBusiness AreaFor the financial reporting, Clariant grouped its businesses in three core Business Areas: Care Chemicals, Catalysis, and Natural Resources. Care Chemicals. The joint venture can deliver to customers in India, Sri Lanka, Bangladesh, and Nepal.
With regard to ethics, environment, safety, and health, the joint venture will follow the higher of the standards of Clariant or India Glycols.
Since 2021, Clariant has also strongly leveraged its 2017 catalyst joint venture with SCIL in India. It serves both to access the fast-growing local market for emission catalysts for two- and three-wheelers, and to form a global manufacturing base for Clariant catalysts.