Materials giant bullish on local market, to focus on customer ties, biz expansion

Covestro CEO Markus Steilemann reiterated the company's commitment to the Chinese market, and said it will continue to pour investment into areas supporting China's sustainable goals.

"Roughly 20 percent of our group sales come from China. We have 10 production sites in China. We also have our regional headquarters and Asia-Pacific innovation hub here in Shanghai. China is one of the most important markets for us," Steilemann said during a media meeting at the company's Asia Pacific Innovation Center in Shanghai on Tuesday.

One project that exemplifies China's importance to Covestro, the German executive pointed out, is the building of the company's largest Thermoplastic Polyurethanes (TPU) site in Zhuhai, Guangdong province.

Located in the Zhuhai Gaolan Port Economic Development Zone, the first phase of the new site is expected to be completed by the end of 2025. Following the completion of the third and final phase in 2033, the facility will be capable of producing about 120,000 metric tons of TPU per year.

According to the company, the entire project represents a major investment that is in the "low three-digit million euro range".

Steilemann said one of the key reasons behind the decision to increase Covestro's production capacity in China is the need to be close to its customers.

"The largest market in the Asia-Pacific is China. It benefits us to be close to our customers here. This means we don't have to pay too much for logistics. Besides, we are a B2B business. The closer we are to our customers, the better we can understand them and respond to their concerns," he said.

Another reason behind expanding its footprint in China is the nation's sustainability drive, which has provided the company with new business opportunities.

Steilemann noted that Covestro has recently been busy supplying its Chinese clients with materials used to build new clean energy generators like solar panels and wind turbines, which he says will be pivotal to China's quest to peak carbon dioxide emissions by 2030 and achieve carbon neutrality by 2060.

Other examples of how the growing focus on sustainability in China has been a boon to Covestro's business include the company's deal to supply Shanghai-based electric vehicle startup HiPhi with low-carbon material solutions.

In a show of its commitment to helping China lower its emissions, the company — aiming to become operationally carbon neutral by 2035 — will increase its use of renewable energy such as solar and wind power at the Covestro Integrated Site Shanghai from the current 30 percent to 50 percent this year, added Steilemann.

The company has also signed a letter of intent with Chinese sports equipment manufacturer Xtep and its partner Silan Group during the fifth China International Import Expo to explore ways to produce low-carbon running shoes and promote the circular economy.

Steilemann pointed out that the unveiling of the EcoFoam mattress at Covestro's booth during the fifth CIIE was a success as all units were quickly sold out during a livestream session. Produced by Hong Kongbased Sinomax, the mattress is made using Covestro's bio-attributed TDI (toluene diisocyanate), which has a smaller carbon footprint compared to conventional fossil-based materials.

Steilemann noted that Covestro will once again participate in the expo this year.

"There is an intrinsic value in the CIIE because it provides companies with a much broader view of the Chinese market compared to the usual industry events. The CIIE also allows us to better understand consumer needs and meet more partners, which we need to get close to local consumers," he said.

"For Covestro, the CIIE is also a helpful platform through which the rest of the world can learn about our potential in serving China's development."