As China pushes its Belt and Road Initiative to increase trade between Asia, the Middle East and Europe, polyolefins manufacturer Borouge Pte. Ltd. said it's expanding its presence in western China.
In an interview at the Chinaplas trade show in Guangzhou in May, Borouge CEO Wim Roels said the company is making investments in the region once known as the Silk Road, the ancient land and sea trade routes that connected Europe and Asia.
Roels, who heads the company's Singapore-based marketing arm, says the resin supplier is following customers who are paying close attention to the Chinese government's encouragement.
“This kind of development we cannot lead, we can only follow,” he said. “We actually opened a new warehouse in western China in Luzhou, Sichuan province, this year. We are also exploring establishing some sales presence in that area. We already have people traveling there, but to have it more on a permanent basis, because we believe part of the industry is moving westward.”
Customers are opening plants in Urumqi, in Xinjiang province, and in Chengdu, in Sichuan, he said.
“You start to have a critical mass that comes of a level where we decided to put up warehousing and that we are going to have more presence,” he said. “In other parts, even more west and more north, it is more they don't have the critical mass yet, so it is kind of individual customers starting to move and invest in these areas.”
Beijing announced the Belt and Road Initiative in 2013. It reportedly includes the Chinese government spending $150 billion a year in infrastructure and other projects in the countries that have signed on.
“With this effort, improving infrastructure, both sea and over land, we believe it will create even more opportunities for us, because it will make business that much more accessible for us,” Roels said.
“I think it will bring prosperity to quite a few areas along the road. With investments, with jobs, which means people have money, so they can also spend more money on consumables, so as such we are actually very supportive and happy with the initiative.”
Roels is also noticing a trend towards higher quality and design among his local customers in China, as well as safety.
“We see now really an evolution from customers where the staff are focused on quality, design, look, and performance, because that is what their Chinese customers demand from them. They don't just want the product, they want the nice product, they want the nice design, good looking, and they want quality and lifelong lasting products,” he said.
Roels said that trend has been developing for several years but is “getting stronger and stronger.”
“I hear it when I go around seeing customers,” he said. “If I go to packaging, I go to infrastructure, I go to automotive, I hear the same message time after time after time: ‘We want quality, we want design, our customers are expecting that from us.'
“I think that is one of the big changes which is happening today in China,” he said.
Borouge, which is a joint venture of Vienna, Austria-based Borealis AG and Abu Dhabi National Oil Co. (ADNOC), started the world's largest integrated polyolefins complex, Borouge 3, in the United Arab Emirates in 2015. That doubled the company's production capacity.
Polyolefin consumption in China is growing about 6 percent a year and by 2022, local industry demand will surpass 154.3 billion pounds of polyethylenes and polypropylenes.