The Transformation Of Traditional Chemical Giants: Coase Created A Continuous Bet On The Sustainability And Digitalization Of The Chinese Market.

"We are facing severe challenges such as climate change and resource consumption due to population growth, which is essential for a truly sustainable lifestyle and economy. The single linear production and consumption mode based on single use is out of date. We must strengthen the concept of recycling and take corresponding actions in time. On October 15th, the day before the opening of the 2019 International Plastics and Rubber Exhibition (K) in Dusseldorf, Germany, Dr. Markus Steilemann, the chemical giant, emphasized the importance of circular economy in a press conference. At the same time, he said that in the next few years, digitization will be another driving force for economic and social development. "Shi Lewen"

Xerox emphasizes that sustainability and digitalization are the key words of this year's K exhibition, and this is basically the key word for K exhibition and the whole chemical industry in the past two years.

We live in a world that cannot be separated from plastics. However, the controversy in the plastics industry has never stopped. How to manage waste plastics is becoming more and more important. In the future, economic success will depend more and more on the integration of digitalization, production process and product development, which requires innovative pioneering spirit. Nowadays, it is not enough to evaluate material value only according to the function of materials. Sustainability has been raised to an unprecedented level.

On the other hand, the downward trend of the global chemical industry, slowing down and fierce competition, prompted giants to start looking for new profit points and high value-added businesses, and digitization has become an important investment direction.

"Turn around" in plastics industry

In from October 16th to 23rd, the three annual K exhibition was held in Dusseldorf, Germany, the largest plastics and rubber industry in the world. This year, there are about 3300 exhibitors, including new products and new developments including raw materials and auxiliary materials, machinery and equipment, semi-finished products, technology components, reinforced plastics products, services, research, science and other fields. According to official data of K exhibition, there were 3293 exhibitors in 2016, and a total of 61 exhibitors in 2016. A total of 232053 visitors were from 161 countries.

Large exhibition is a good opportunity to observe the trend of the industry. In recent years, sustainable development and digitalization have become the most important topics in the industry development and Industry Summit.

For example, one of the key words of the K exhibition this year is "4 of the plastics industry", which is built on the topic of sustainable development and circular economy. In twenty-first Century, the economic report reporters observed that the two small and medium-sized exhibitors repeat the key words in different angles and different ways at the K exhibition.

COSCO launched a series of innovative products and solutions at the K exhibition, focusing on sustainable development and digitalization, mainly applied to products and technologies in the automotive, construction and electronics industries, as well as innovative and functional applications for healthcare, furniture, sports and leisure.

In the automotive industry with the highest concern, cos shows a comprehensive interior concept for future travel. With the development trend of driverless, electric vehicles and shared cars, automobiles are becoming a multi-functional mobile life and workspace. In the future, automobiles will focus on functionality, comfort, design and energy efficiency. The concept is co developed by COSCO and automotive value chain partners. The main features include the newly designed surface, vehicle interior lighting integration, the latest information entertainment system and the forward-looking seat design.

Another industry giant BASF also took the car as the highlight of the exhibition, launched the VisionVenture concept car, and the concept car, which was jointly built by HYMER and the company, is about to enter the production stage. According to the introduction, the new RV uses BASF Development Center's development technology, and has made an attempt in light structure, independence, travel experience and design.

Wanhua, a exhibitor from China, showcase all 3D print shoes with PEAK sports. The latest Wohlers 2019 report shows that the global 3D printing industry has maintained rapid growth in the past 7 years, and the market size has reached 8 billion 920 million euros in 2018. It is expected to grow by more than 25% in 2019, reaching 11 billion 270 million euros. As a big manufacturing country, China's 3D printing market has also achieved rapid growth, and its share in the global market has gradually increased to 28%. In the many applications of 3D printing, 3D print sports shoes have attracted the attention of consumers because of their continuous attempts at landing technology and the launch of forward-looking products. Many exhibitors have launched 3D printing sports products.

Digitalization potential of China's market

In addition to the pollution and energy consumption of the plastics industry, the chemical industry is not as profitable as before. It is also the reason why chemical giants have to face new decisions.

COSCO's performance in the first and second quarters of 2019 was not as good as last year's. As the market continues to face severe competition pressure and uncertainty in the main sales market, competition intensified in the first half of 2019. Sales fell by 16.4% to 6 billion 386 million euros due to lower sales prices, EBITDA fell 56% to 901 million euros, and net profit was 368 million euros (-70.5%).

Tao Pengfei, chief financial officer of Dr. Thomas Toepfer, said in an interview with the twenty-first Century economic report that there are two reasons for this year's performance. First, the performance of last year is much better than that of this year. Last year, the global market was short of supply, the demand was strong, and the profit rate was very high, but that was not sustainable. So this year is also in line with expectations. The two is the global economic slowdown. Our core business sales in the two quarter of this year are still increasing, and the profit margins are up to standard. "

As industrial production was significantly lower than expected, it had a negative impact on sales and profits. Another giant BASF also lowered its annual vision. BASF reported that sales in the second quarter of 2019 fell by 4% to 15 billion 200 million euros; pre tax earnings excluding special items were expected to be 1 billion euros, down 47% from the same period last year, mainly due to a large decrease in revenue from materials, chemicals and agricultural solutions business compared with the same period last year.

BASF forecasts that the growth rate of industrial production in the first half of 2019 is about 1.5%, much lower than expected. The growth of the global automotive industry is particularly notable: in the first half of 2019, global output fell by 6%. Uncertainties in Global trade lead to increased risk factors and are not expected to ease in the near term.

"The performance in the first half of the year is in line with the expectations in the current economic environment. We will pay close attention to the further development of major sales markets. " Tao Pengfei explained, "for example, the development of the automotive industry is far from expected, and the construction and wood and furniture industry is doing well."

In addition, the efficiency improvement brought by digitalization is also one of its concerns. According to McKinsey Global Research Institute, by 2030, digital technology will transform in China and create 10%-45% industry income. With the popularization of data and computing power, the communication between internal production and operation and the communication between industry value chain partners is becoming more and more close. Digitalization is bringing new opportunities for the entire chemical and plastics industry. According to the recent study of the world economic forum, the economic benefits of Digitalization for the global chemical materials industry are expected to reach 310 billion -5500 billion in the 2016-2025 years.

China is one of the most important markets in the world. In 2017, China became the first largest single market in the world for the first time. The digital development of the Chinese market also made COSCO and other chemical giants start experimenting with new business models.

As a B2B enterprise, COSCO began to apply digital technology and working methods to all links including production, logistics and R & D. Among them, including announcing the launch of flagship flagship store on Alibaba's 1688.com platform this year, is aimed at serving the vast number of small and medium-sized customers in China. 1688.com is China's largest B2B online market platform.

For the specific application of digitalization, Tao Pengfei introduced three main aspects: "first, the transformation of the production process, the preventive maintenance through sensors, and the improvement of production efficiency; two, the transformation of sales mode, such as the electronic business platform that is working with Alibaba; three, the development of digitalization, such as innovation through AI and big data, which is very important but underestimated for a long time."

China is the experimental field for these applications. "China is leading coss to create global innovations, such as fan blades, materials for electric vehicles, etc." In July, Lei Huanli, President of COSCO China, told the economic report in twenty-first Century at the exhibition, "we have more and more Chinese colleagues coming to K exhibition, because some products can only be made clear by us. It is challenging to maintain high growth in the Chinese market, but our headquarters still have confidence in us. "