BASF SE is prepared to further cut operations in Asia, with a goal of eliminating 250 million euros ($281 million) in costs, as competition with local companies and a slowdown in demand hurt profits, said board member Sanjeev Gandhi.
“We are restructuring and downsizing in mature Asia, where there is a need,” Gandhi, who heads BASF operations in Asia, told reporters in London following a strategy presentation. “It’s an ongoing, case-by-case activity. Whatever makes sense we keep; whatever isn’t competitive we divest or shut down.”
BASF has had to abandon a target for 25 billion euros in sales by 2020 amid a downturn in the region, struggles against local rivals and overcapacity in some markets. It’s now looking only to outpace the regional growth rate, with Gandhi steering BASF toward Asia’s faster-growing markets such as Vietnam, where demand for chemicals used in farming, textiles and motorbikes is booming.
After years of joint ventures with western companies to gain expertise, China’s chemical industry is challenging in markets globally with planned deals like China National Chemical Corp.’s $43 billion purchase of Swiss agrochemical maker Syngenta AG. Ludwigshafen, Germany-based BASF, which entered China more than 130 years ago selling dyes, plans to concede markets where it doesn’t have a competitive advantage through innovation or technology, and step up partnerships in China, Gandhi said.