German speciality chemicals company Degussa has founded a holding company in Beijing - Degussa (China) Holding - to expand the group's activities in the Chinese region.
Degussa management board chairman Professor Utz-Hellmuth Felcht said: "This step takes Degussa to the top division of global companies engaged in China at a time when the country is leading the way within the Asian chemical industry. China is also of particular strategic importance to us in view of its accession to the World Trade Organisation at the beginning of 2002."
The company added that to date, only about 200 holding companies involving foreign investors have been allowed to set up business in China.
Degussa (China) Holding will support Degussa activities for Chinese businesses and also determine the direction of research and development, increase contacts with China's leading universities, and recruit Chinese junior executives.
Degussa started producing speciality chemical products in China in 1988 and currently operates eleven locations in Nanning, Guangzhou, Kaiping, Shanghai, Qingdao, Tianjin and Beijing, employing around 800 people. The Chinese operations also serve customers throughout Asia. Degussa generated total sales of around €210 million in China in fiscal 2001 and plans to make further investments in the area.
The company also announced recently that transformation of the group into a purely speciality chemicals company is almost complete, with about 90 per cent of the non-core operations sold.
Degussa will use proceeds, totalling some €3.7 billion to date, to expand growth areas within speciality chemicals and to reduce debt. In the coming years, the group is to enhance profitability by restructuring, cutting 2,800 jobs by the end of 2002.
"We aim to realise annual savings of €500 million a year as of 2004, and there is every sign that we will achieve this objective," said Professor Felcht at the group's autumn press briefing last week.
He said the company would continue to make acquisitions in growth areas such as the Specialty Polymers and Health & Nutrition divisions.
Germany's third-largest chemical company generated operating profits (EBITA) of more than €1 billion in 2001.