(Yicai) Nov. 10 -- Despite talk in Europe of so-called decoupling and risk mitigation in the wake of the Russia-Ukraine conflict, polymer giant Covestro and software behemoth SAP remain pragmatic about making decisions to invest in China, according to executives from the German firms attending the China International Import Expo.
Businesses should be just that, Holly Lei, president of Covestro China, said in a recent interview with Yicai at the CIIE being held in Shanghai. Covestro goes with the markets that offer the most opportunity for the company, she added.
Leverkusen-based Covestro has kicked off new projects in China this year. In February, the firm said it would build its largest factory for thermoplastic polyurethanes in Guangdong province. The logic behind the decision was very simple: the company starts with those places that benefit its operations and overall development, Lei said.
Covestro, a leading producer of high-quality polymer materials and components which separated from German pharmaceuticals giant Bayer in 2015, had sales of about EUR18 billion (USD19.2 billion) last year. Its major products include polycarbonate and polyurethane used in vehicles, building insulation, and furniture.
SAP applies a similar logic. The Walldorf-based company opposes decoupling, Huang Chenhong, president of SAP China, said to Yicai.
The opportunities in the Chinese market are increasing and SAP has been enjoying strong growth in its local cloud business, Huang said. In China, SAP not only offers services to German companies such as BASF and Mercedes-Benz but also helps large local businesses such as Lenovo Group and Xuzhou Construction Machinery Group achieve digital transformation.
China's supply chain system is very comprehensive and irreplaceable, Huang noted, adding that the market is vast and the country is a world-class developer of innovative technologies. SAP hopes to go from strength to strength in China, further localizing its strategy, spending more on research and development, and nurturing more talent and ecosystems, he added.
Covestro is also allocating key resources to China. Its has invested more than EUR3.9 billion (USD4.2 billion) in the country, Lei said. The company has sited its biggest integrated production base in Shanghai along with one of its big three innovation hubs, the global headquarters of a business group, and the Asia-Pacific head offices of several business groups and divisions, she added.
Moreover, Covestro has also sited the global HQ of it engineering plastics business in China for better decision-making and greater speed to market, Lei said.
China contributes a fifth of Covestro's total revenue, the regional chief said, adding the country is growing its economy faster than others. Energy price fluctuations are a big challenge for Covestro, and the unsatisfactory European economy is an even bigger one, she noted.
Whether it is about telling a story about Covestro in China or telling the economic story of China to the world, multinationals are a mighty “transmission belt,” according to Lei, who was the first Chinese national appointed president of a global business group at the German firm.
Editors: Tang Shihua, Emmi Laine