China's Chemical Industrial Parks Foster Growth

As the third-largest industry in China, China's chemical sector already accounts for 15% of global demand. Strong overall industrial growth, combined with improved infrastructure for supporting chemical production have combined to fuel a boom in the sector. This week, RightSite takes a closer look at China's chemical industrial parks and analyzes the advantages these specialized zones can offer to investors in the chemical world.

Demand for Chemicals to Support Industry

 

Due to the growth of industrial production, China has become the largest importer of chemicals and the third-largest consumer of chemicals in the world. China's demand for industrial chemicals has already made it account for 15% of the market worldwide.

 

And this growth is expected to continue. A research report entitled “Finding Opportunities and Avoiding Pitfalls in China's Chemical Industry” published jointly by PriceWaterhouseCoopers and the Economist Intelligence Unit (EIU) in 2008 indicated that, “China's demand for petrochemicals and plastics is expected to rise between 6% and 8% each year over the next decade, outpacing growth in Asia (5.4%) and the world (3.6%) for the same period. And China’s chemical industry as a whole is expected to grow at an average rate of more than 10% through 2016.”

 

Incentives to Localise Production

 

The growth of China's industrial base has also meant that the economy has reached the stage where it is economical to produce industrial chemicals locally and reduce the need for imports.

 

To cut down the need for imported chemicals and improve the cost competitiveness for other sectors that rely on chemicals for production, China's central government has begun encouraging local production of industrial chemicals through tax breaks and other incentives. These incentives concentrate on offering advantages for companies producing chemicals with low environmental impact or that contribute to China's energy independence.

 

In China's “Catalogue for the Guidance of Foreign Investment Industries” updated in November 2007, changes made to the “encouraged” and “restricted” categories reflect the government's emphasis on the development of certain chemical sub-sectors, while shielding domestic producers from competition by imposing import restrictions on other sectors.

According to the revised catalogue, foreign investment is encouraged in engineering plastics, environmentally-friendly fertilizers and pesticides, and coal chemical production.

 

The central government also provides preferential treatment to foreign investors in these encouraged areas. For example, companies operating in the encouraged sectors are entitled to claim valued-added tax refunds of China-made equipment purchased for manufacturing.

Chemical Zones Show Growing Strength

 

China's chemical industrial parks have grown along with the nation's economy. As early as 1995, many provinces started to allocate resources to support the development of chemical industrial parks in their regions and provide the resources necessary for nuturing chemical enterprises.

 

Critical Infrastructure in Place

 

Compared to ordinary industrial zones in China, chemical zones have the advantage of being able to provide investors with industry-specific infrastructure, such as well-established industrial waste and water treatment facilities, high-standard warehousing facilities for chemical materials storage, and effective bulk transportation networks. The Yangtze River Chemical Industrial Park, for instance, has invested over RMB 3 billion in the construction of water supply, wastewater treatment, on-site power supply, and steam facilities. The zone also has three 50,000 dead-weight tonnage terminals and four chemical terminals for transportation.

Industry Clusters Promote Growth

 

Another advantage that specialized chemical parks can offer is providing investors a role in a symbiotic industrial cluster. Shenzhen Fine Chemical Industrial Park, for example, has formed a complete fine chemical industrial chain that links both up-stream and down-stream enterprises in the zone. As part of the Dayawan Petrochemical cluster, the zone is only 13 km from the Huzhou Dayawan Petrochemicals Industrial Park and 12 km from the CNOOC/Shell ethylene project which provide the materials for more complex downstream production. Stable raw material supply and superb location have attracted many investors along the industrial chain which include new composite materials, energy plastics and special chemicals production to set up businesses there.

 

8 China Chemical Industrial Parks You Should Know

 

1.Shanghai Chemical Industrial Park

Covering a total area of 29.4 square kilometres, Shanghai Chemical Industry Park was China's first industrial zone specialized in the development of petrochemical and fine chemistry businesses in China. The park was also one of the first four industrial production bases in Shanghai. By the end of 2007, Shanghai Chemical Industry Park had attracted a total investment of USD 100 billion and is home to major multinational companies in the chemical industry including Bayer, BP Amoco, Mitsui Chemicals, Huntsman, Vopak and BASF Chemicals.

 

RightSite Listing: http://rightsite.asia/en/industrial-zone/shanghai-chemical-industry-park

 

2. Jiangsu Taixing Chemical Park

 

Established in 1991, Taixing Chemical Park is located in Jiangsu Taixing Economic Development Zone, a major industrial zone in Jiangsu province with a focus on the chemical industry. The zone was upgraded by the Jiangsu government to become a national level fine chemical industrial zone in 2005, and also granted the status of “Taixing Fine Chemical and Special Chemical Industrial Base” by the Ministry of Science and Technology in 2005 under the National Torch program. Over its 16 years of development, the zone has attracted over 142 enterprises, of which 32 are foreign-invested or joint ventures companies.

 

RightSite Listing :http://rightsite.asia/en/industrial-zone/jiangsu-taixing-chemical-park-0

 

3. Ningbo Chemical Industry Park

 

Ningbo Chemical Industry Park is a provincial chemical industry park established in 1998. With a total area of 56 square kilometres, the park enjoys a powerful transport network with national highway 329 and the Hangzhou Harbor Bridge nearby. According to the 2002-2010 development plan issued by the Ningbo government, the zone will give priority to oil refinery, fine chemicals, composite materials and the high polymer material industry. So far the zone has attracted more than 70 enterprises, including LG Yongxing Chemical, Zhenghai Petroleum & Chemical, Hangzhou Bay Acrylic Fiber.

 

RightSite Listing: http://rightsite.asia/en/industrial-zone/ningbo-chemical-industry-park

 

4. Jiangsu Yangtze River Chemical Industrial Park

 

Yangtze River Chemical Industrial Park was established in 2005 as a provincial zone in Jiangsu. The chemical industrial park is located in Zhangjiagang Free Trade Zone, and has four petrochemical terminals and can provide investors a convenient transport network and high-standard storage facilities. The primary focus of the chemical industrial park is fine chemicals. With a planned area of 46 square kilometres, the zone has attracted over 500 enterprises since 2002 and is home to China's largest market exchange for liquid chemicals.

 

RightSite Listing: http://rightsite.asia/en/industrial-zone/jiangsu-yangtze-river-chemical-industrial-park

 

5.Changjiang International New Chemical Materials Industrial Park

 

Changjiang International New Chemical Materials Industrial Park is located in the Jiangsu Nantong Economic Development Area (NETDA), a national level industrial zone in China. The industrial park, which covers an area of 12 square kilometres, is one of the four specialized parks in NETDA. With the goal of becoming a major chemical logistics hub along the Yangtze river, the park has built five ten-thousand ton freight terminals and 530,000 m3 of chemical storage tanks. Major investors established in Changjiang International include Japan OJI Paper, CJ China and Mitsubishi Rayon.

 

RightSite Listing: http://rightsite.asia/en/industrial-zone/changjiang-international-new-chemical-materials-industrial-park

 

6.Chongqing Changshou Chemical Industrial Park

 

Located in Changshou district of Chongqing, Changshou Chemical Industrial Park was approved by the Chongqing municipal government in 2001. SinopecGroup Sichuan Vinylon, the largest gas and chemical fiber manufacturer in China, and YARACO, the largest acetic acid producer are both located in the park. As an important chemical base in western China, the Changshou Chemical industrial park has attracted many chemical companies to establish businesses here. Major investors include BP, Sinopec, China National Petroleum, BASF, Linde Gas, Praxair, Dalkia, Degussa, and Mitsubishi Gas Chemical.

 

RightSite Listing: http://rightsite.asia/en/industrial-zone/chongqing-changshou-chemical-industrial-park

 

7.Shenzhen Fine Chemical Industrial Zone

 

With a planned area of 13.05 square kilometres, Shenzhen Fine Chemical Industrial zone is a relatively small park, but with its location in the Pearl River Delta, one that enjoys a convenient transport network. The zone is only 37 km from Hong Kong's Sha Tau Kok Port and 27 km from Shenzhen Yantian Port. The zone specializes in the development of high-value added and pollution-free fine chemical products. Encouraged industries include new composite materials, engineering plastics and specialty chemicals.

 

RightSite Listing:http://rightsite.asia/en/industrial-zone/shenzhen-fine-chemical-industrial-zone

 

8.Guangdong Maoming Petrochemical Industrial Zone

 

Maoming Petrochemical industrial Zone was established jointly by the Maoming city government and the Maoming Sino-petrochemical Group. Covering an area of 43 square kilometres, the zone was granted the status of “Chemical Industry Base” under China's National Torch program. The industrial zone is also a production base for chemical raw materials in China. By mid-2009, the zone had attracted 23 projects worth a total investment of RMB 25 billion.

 

RightSite Listing: http://rightsite.asia/en/industrial-zone/guangdong-maoming-petrochemical-industrial-zone