Germany’s BASF, the world’s largest chemical producer, on Thursday opened an €8.7 billion ($10 billion) production complex in Zhanjiang, China — the company’s biggest ever investment. The southern Guangdong site covers roughly four square kilometers and brings together numerous chemical production units, making it BASF’s third-largest complex after Ludwigshafen and Antwerp.
The move is controversial for two main reasons. Domestically, it coincides with cost-cutting measures at BASF’s German operations, including job cuts in Ludwigshafen and Berlin, prompting criticism that the company is outsourcing jobs to Asia. Politically and strategically, the investment raises concerns about bolstering China at a time when Berlin urges firms to “de-risk” and diversify away from heavy reliance on the Chinese market.
BASF CEO Markus Kamieth said China remains the market offering the greatest growth for the industry and highlighted opportunities tied to new industries, renewables and the green transition. The company argues expansion in China is necessary for future profitability, citing comparatively high energy and labor costs and regulatory burdens in Germany.
While lower environmental and labor standards in China can reduce costs, the investment also carries risks: BASF withdrew from two joint ventures in Xinjiang last year after allegations of rights abuses by a local partner. BASF says the Zhanjiang site employs more than 2,000 people and will produce a range of chemicals for transport, consumer goods and electronics, with most output intended for the Chinese market.
