Heavy Chemical Industry to Embrace New Development Opportunities from BRI

This chapter summarizes the business presence of Chinese heavy chemical companies in BRI countries and the necessity for China’s heavy chemical industry to go global. Then, we use a four-factor model of market, cost, governance, and support for the industry chain to analyze the investment potential of the industry in regions where BRI countries are located. Finally, we review three successful cases of Chinese heavy chemical firms going global, and list the challenges and measures to tackle the risks of investing in BRI countries. We believe it is necessary for companies in the heavy chemical industry to participate in the development of the BRI and to expand their presence in BRI countries. In recent years, China’s heavy chemical firms have invested overseas through M&A and self-constructed factories, which has paid off. We believe investing in BRI countries can help China’s heavy chemical companies seize opportunities and guard against the risk of trade frictions. Meanwhile, Chinese investment may also promote local economic development, improve industrial competitiveness, and deliver mutual benefits. The heavy chemical industry in BRI countries has large investment potential. Overall, the level of urbanization and industrialization in BRI countries is low, implying substantial growth potential for their heavy chemical industries. Based on an analysis of market, cost, governance, and industry chain support, we believe Southeast Asia and West and Central Asia are suitable investment destinations for China’s heavy chemical industry. Some African countries with sound governance also have investment potential, in our view. We review the successes of the heavy chemical industry’s investment in BRI countries and summarize the key features of successful investments: (1) Advanced technologies and outstanding management capabilities; (2) strengthened localized operation and local employee training through different methods; and (3) the goal of mutually beneficial cooperation with governments and communities to pursue development. When going global, the heavy chemical industry faces challenges from factors such as geopolitics, the regulatory environment, financing channels, cultural integration, as well as the construction and operation of factories. We believe governments and businesses can work together to address these challenges. This can be done by establishing a platform of information sharing among BRI countries, improving the investment insurance system, seeking to collaborate more closely with local companies or multinationals, encouraging companies in basic industries to take the lead, promoting the construction of large industrial parks, strengthening local employee training and localization, and enhancing the social responsibility awareness of companies that go global.