BASF, the world’s largest chemical company, on Thursday inaugurated an €8.7 billion ($10 billion) production complex in Zhanjiang, Guangdong, its largest-ever single investment. The southern China site spans roughly four square kilometers and consolidates multiple chemical production units, making it BASF’s third-largest integrated complex after Ludwigshafen and Antwerp.
The project has sparked controversy on two fronts. In Germany, the announcement comes as BASF implements cost-cutting measures that include job reductions in Ludwigshafen and Berlin, prompting criticism that the company is shifting work to Asia. Politically and strategically, some observers question expanding capacity in China at a time German authorities are urging companies to de-risk and diversify away from heavy dependence on the Chinese market.
BASF CEO Markus Kamieth defended the move, saying China remains the market with the greatest growth potential for the industry and pointing to opportunities in new industrial sectors, renewables and the green transition. The company also argues that expansion in China is necessary to preserve future profitability given comparatively high energy and labor costs and regulatory burdens in Germany.
The investment reduces some costs partly because environmental and labor standards in China are generally lower than in Europe, but it also introduces risks. BASF previously withdrew from two joint ventures in Xinjiang after allegations of rights abuses by a local partner, underscoring reputational and ethical concerns.
BASF says the Zhanjiang complex employs more than 2,000 people and will produce a range of chemicals used in transport, consumer goods and electronics, with most output destined for the Chinese market.