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Bloomberg: Shell Says Chemical Makers Encounter `Fierce’ China Competition

By Trisha Huang

June 29 (Bloomberg) — Competition among petrochemical makers is “fierce” in China where foreign companies investing in the country have to battle dominant domestic suppliers, said Royal Dutch Shell Plc, Europe’s largest oil company.

“China’s domestic companies remain dominant producers and sellers in key markets,” Yu Dai, Shell International Eastern Petroleum Pte’s general manager of base chemicals in Asia and the Middle East, said at a conference in Singapore today.
 
A $4.3 billion petrochemical complex in southern China jointly owned by Shell and China National Offshore Oil Corp. was billed as the largest Chinese joint venture with a foreign company when the investment decision was made in November 2002. The chemical complex at Nanhai in Guangdong is expected to generate $1.7 billion a year in sales of chemicals, Shell said on its Web site.

“The combination of international investors and strong, local companies, some operating in joint ventures, means competition in China is fierce,” Yu said in a speech distributed by the company.

China’s rising petrochemical capacity will have an increasing impact on global petrochemical markets, Yu said. International investors need to ensure they have appropriate knowledge of local markets, competitors, and understand “the Chinese culture and ways of doing business,” he said.

China, which overtook Japan last year to become Asia’s biggest ethylene producer with an annual capacity of 9.7 million tons, is expected to account for 30 percent of world plastics and packaging consumption by 2010, Shell said on its Web site.

To contact the reporter on this story: Trisha Huang in Singapore at [email protected] .
Last Updated: June 29, 2007 03:29 EDT

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