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SHANGHAI: Akzo Nobel (AN), a Fortune 500 maker of healthcare products, coatings and chemicals, is to spend 250 million euros on two chemical plants in China - the first confirmed investment in a new multi-site establishment in East China.

Announced last October, the 50 hectare plot has been reserved within the Chemical Industry Zone in Ningbo, a coastal city of Zhejiang Province. The two new facilities, which will produce chemicals used in a wide variety of industrial applications, will be the first constructed on company's largest site worldwide.

AN plans to be the top player in China's covering material market, where household consumption is growing at about 20 percent a year.

"Accelerating growth, particularly in the emerging markets, is one of the company's main strategic priorities," said Leif Darner, the Akzo Nobel board member responsible for the chemicals division.

"The scale of this substantial investment not only underlines the fact that our growth strategy is gaining momentum, but also reinforces our commitment to consolidating our leadership positions across all businesses."

He said China is an important market for the company and that they have to respond to a growing demand for their products. "We plan to make further investments in grassroots chemical production facilities in Ningbo at the appropriate time," he added.

Both plants, which will create several hundred new jobs, will utilize state-of-the-art technology and will have to meet self-imposed standards for eco-efficiency. One plant is expected to kick off production in 2009, the other in early 2010.

"We are planning to build two world scale production facilities similar in size and scope to our existing plants in Europe and the United States," said Jo Lennartz, general manager of AN's functional chemicals business. "We will also install the capacity to manufacture our own key raw materials."

The company has chosen Ningbo because of its location near Shanghai and its transport links that will enable AN to supply customers in China and the entire Asia-Pacific region.

The Netherlands-based company, whose coatings business accounts for 75 percent of China sales, has been pushing aggressively in the country, which has a crowded market of more than 7,000 manufacturers of decorative coatings.

The company said its goal of grossing $1 billion in China by 2010 is within reach.

China is now the world's second-largest chemicals market and is expected to grow at 8 to 9 percent until 2015.

The local coatings market is also generating an impressive annual growth rate of more than 8 percent, a trend likely to continue into the next decade while the US and European markets flatten out.

(China Daily 05/11/2007 page14)