Saudi Basic Industries, a Fortune 500 company that rises in the Arabian Peninsula, is increasingly reliant on the Chinese market as the helm of the chemical giant, who came to China to attend the 2017 CEO of Guangzhou Fortune Global Forum Yusuf Al-Bayan Yusuf ') expressed SABIC's vision of further expanding investment in China. He told CBI reporter:' In the future, SABIC should concentrate its efforts on doing business in China and increase its investment in fixed assets in China the amount' .
First Financial News reporter learned from the official data, China has become SABIC one of the most important strategic market, the current Chinese market contributed to SABIC nearly 20% of global sales revenue.China Petroleum and Chemical Industry Federation released data show that as of 2017 In August, China's chemical industry achieved a GDP of 961.5 billion U.S. dollars, a substantial increase of 14.2% over the same period of last year. From this perspective, the Chinese market has sufficient potential and momentum and continues to be the engine of growth for SABIC's global business.
Saudi Basic Industries Corporation (SABIC) is the world's leading diversified chemical company headquartered in Saudi Arabia. SABIC is the world's fourth-largest chemical company after multinational giants such as BASF, Dow, etc. In 2016, SABIC Net profit of Rs 17.8 billion ($ 4.8 billion) and sales revenue of Rs 132.8 billion ($ 35.4 billion), ranking 299 on the Fortune Global 500 list in 2017. By the end of 2016 , SABIC's total assets reached 316.6 billion riyals (84.5 billion U.S. dollars), bringing the total production of SABIC to 72.7 million metric tons in 2016. Currently, the Saudi Arabian government owns 70% of SABIC's shares and the remaining 30% is traded on the Saudi Arabian Stock Exchange Openly traded.
Continued to force the Chinese market
Starting from the very beginning of a single business representative office, and after 35 years, SABIC has established an advanced R & D center in Greater China and has established factories in Shanghai, Guangzhou and Chongqing, City business.
The total number of employees is over 1,500, and the total investment in fixed assets exceeds 1.8 billion U.S. dollars.
You Sufu with a set of data to show to the first financial reporter that China's future will remain an important SABIC investment destination: in 2017 and 2016, China has achieved foreign direct investment (FDI) growth, further confirms the current China Of the investment environment is still very attractive to foreign-funded enterprises.In addition, the New York Stock Exchange listed on the market value of the top 500 companies, 50% of which have business in China, and 41% of the total revenue of these companies come from the Chinese market.
Strong support for the data SABIC confident of the Chinese market.You Sufu told CBN reporter, 'We will continue to make commitments to increase SABIC's development in China to further expand its business in China.' According to Yusu Fu introduced, SABIC future investment in China will focus on several core products, including polyethylene, polypropylene, methanol and ethylene glycol, and polycarbonate business.
At present, the chemical company from Saudi Arabia has completed a joint venture with Sinopec Group in 2009. In 2009, SABIC and China Petrochemical Corporation announced a joint venture to build an annual output of 3.2 million tons of chemical products in the sand Tianjin Petrochemical Co., Ltd. (SSTPC) was put into full operation on May 8, 2010. It has also reached a principled agreement with Shenhua Ningxia Coal Mining Group Corporation and Ningxia Hui Autonomous Region Government on further promoting the construction of joint ventures. In the future, it is expected that a total of Build a joint venture coal chemical plant.
SABIC, one of the two largest central SOEs in the Sinopec Group and Shenhua Group, has aroused the industry's attention. For the time being, SABIC is continuously deepening its business in China.
SABIC just signed a memorandum of understanding with Guangzhou Nansha Development Zone on December 8. SABIC's Nansha plant located in Guangzhou's Nansha Development Zone was established in 1994 with a total investment of 248 million U.S. dollars and has since become the site of SABIC in Asia The largest mixing plant occupies an important position in the entire industrial chain in China and around the world and the signing of this memorandum has made Guangzhou Nansha a preferred destination for SABIC to consider further investment expansion in China.
The success of a multinational corporation often depends on the performance of a number of key markets. In particular, SABIC strives to become the third-largest petrochemical company in the world by 2025. Obviously, in Yusuf's global business landscape, revenue accounts for the total revenue 18% of the Chinese market is crucial.
Cyclical industry's way of survival
The dazzling performance of key markets means that SABIC will make larger and longer-term capital investments in key markets like China and the United States. First Financial News reporter learned from SABIC that SABIC currently has three major long-term investments Projects are under way, including SABIC's OTC project to manufacture chemicals directly from crude oil with Saudi Aramco, a 1.8mt ethylene cracker project with ExxonMobil in Texas, USA, Shenhua Ningxia Coal Industry Group for coal chemical projects.
At the same time a number of investment projects launched at the same time, will bring greater financial pressure on SABIC? Because of the cyclical nature of the chemical industry, how to ensure the steady growth of a chemical industry and balance the long-term investment planning and the relationship between the cyclical unexpected factors Not easy.
As prime minister of the world's top 500, Yusuf apparently has his own story. He told First Financials that in order to minimize the uncertainty caused by this challenge, SABIC will often choose to invest low and wait for the sector "We have made many successful attempts in this regard, we can not say 100% success, but at least 75% success rate," Yusuf said.
SABIC, a multinational corporation with operations in more than 50 countries around the world, employs approximately 35,000 people and SABIC has manufacturing facilities throughout the world including the Americas, Europe, the Middle East and Asia Pacific, both of which are considered by Yusuf as the company's global business landscape The inevitable choice for expansion is also one of SABIC's means to deal with cyclical fluctuations in the industry Yusuf told First Financials that due to the time lag between cyclical fluctuations in the industry for different markets such as China, Saudi Arabia or the United States, SABIC chose The world-wide investment strategy of diversified assets minimizes the risks posed by cyclical fluctuations to the normal operations of the Company.
In addition to the macro-strategic options, SABIC will be more technically responsive to cyclical fluctuations. 'We are going to further expand SABIC's business in specialty fine chemicals as bulk chemicals are more susceptible to energy prices such as crude oil Cyclical fluctuations, resulting in greater volatility, while the fine chemical fluctuations is relatively small, so as to reduce cyclical fluctuations in SABIC's business impact. '' In addition, Yusuf also attaches great importance to SABIC raw materials diversification strategy, he told First Financial News reporter, 'Now SABIC mainly relies on natural gas and will introduce shale gas, coal and so on in the future so that we can make full use of the fluctuations in the price of each raw material to reduce the impact of market raw material prices on SABIC production and operation. '
As a global chemical giant, SABIC's response to cyclical fluctuations in the industry is undoubtedly worth learning from. However, knowing that it is easy and feasible, at the end of the interview, Yusuf Fu told CBN reporter: 'Speaking orally, this is a very sophisticated and very complex But also a very good strategy, but it is not so easy for the Fortune 500 companies to implement. "