A few days ago, the European Union announced that it would impose high tariffs on China's electric vehicles from July 4, and China has launched anti-dumping investigations on brandy and pork in Europe, and paid close attention to tariffs on dairy products, luxury goods, and large-displacement vehicles. The trade friction between China and the EU has once again become the focus of public opinion.
Against this backdrop, a number of media reported that the German chemical giant BASF plans to close 11 domestic factories and switch to China.
At the beginning of this year, BASF publicly stated that it planned large-scale layoffs, mainly in Europe, due to high energy costs in Europe, the prolonged conflict between Russia and Ukraine, and rising interest rates year by year.
It is understood that BASF plans to close 11 production plants in Ludwigshafen, most of which are no longer profitable, and even have a high amount of losses.
According to the data given by the German Chemical Industry Association, about one-fifth of the investment in the German chemical industry has flowed to China recently. Some BASF employees have also received "uncertain information" that they are preparing to move to China.
Although BASF has remained silent about the rumors, it is no secret that the company is "heavy" in China. In the words of Lou Jianfeng, Chairman and President of BASF Greater China, "BASF is where the market is, where the growth is", BASF will never be able to refuse the size of the Chinese market.
For example, during the pandemic, BASF has made bold investment decisions to promote the Verbund project in Zhanjiang, with an investment of up to 10 billion euros by 2030, equivalent to five Tesla Gigafactories, which is the largest independent single investment project since BASF was founded, and the largest single project invested by a German company in China, which is not difficult to see BASF's confidence in the Chinese market.
At the time, BASF said that it would not be easy to make this decision during the pandemic, but they did not hesitate for long because BASF decided that its "economic well-being depends on China".
In fact, for BASF, China is not an option, but a must. At a time when Germany was clamoring for "decoupling and breaking the chain", several BASF executives jointly published an article with a simple but brutal headline: "Withdrawing from China will cost us the opportunity".
In 1992, BASF was only a joint venture plant for resin production in China. But in just 30 years, Greater China has become BASF's second largest market after the United States. In 2022, China became the world's largest chemical country, accounting for 49% of global chemical production.
BASF estimates that China will account for half of the global chemical market by 2030 at the latest. "Investing in China is equal to investing in the future".
Not long ago, BASF just withdrew from the Indonesian nickel and cobalt project that has been in the making for three years and originally planned to invest 10 billion yuan. At that time, it was widely believed that BASF would most likely have "big moves" in the future. Considering that BASF is gradually reducing its production in Europe, a shift to China should be a probable occurrence.
Of course, this does not mean that BASF wants to abandon Germany and Europe, but companies are profit-seeking, and they will naturally prefer a better business environment. After all, since the outbreak of the Russia-Ukraine conflict, Europe has fallen into a vicious circle of geopolitical binding economic and trade issues, such as excessive regulation, high energy costs, and serious bureaucracy, resulting in extremely limited profits of industry giants represented by BASF.
To put it simply, capital knows no borders, and the investment of companies will show their choices. The "decoupling and breaking of the chain" advocated by the false big empty has never been able to rewrite the objective facts. China will unswervingly deepen its opening-up and take multiple measures to attract foreign investors to invest in China.