De-risking or Doubling Down?

German chemical companies face a strategic decision: Should they reduce their dependence on China ("de-risking") or continue to invest heavily? Despite political tensions, China remains the world’s largest chemical market, making it essential for the industry. China's high attractiveness is reinforced by stagnant markets in the EU and the US and the challenges facing chemical production in Germany. While companies like BASF, Merck, and others continue to invest significantly in China, they also face rising risks, including geopolitical tensions, potential image issues, and increased regulatory demands.

To mitigate these risks, some companies are adopting an "In China for China" approach, producing locally and tailoring R&D to local needs. Additionally, options like partially divesting Chinese operations may become necessary in a worst-case scenario if tensions escalate. This article explores the complex balancing act between growth potential and geopolitical risks that German chemical companies currently navigate in their Chinese operations.

Here’s the link to the full article:

https://www.chemanager-online.com/en/news/de-risking-or-doubling-down