OVER the past 40 years China has changed faster than any other country in the world. This once poor and isolated nation, which is home to more than 1.3 billion people, is now the second largest economy in the world. In 1980 it produced just 2% of the world’s economic goods; today the figure stands at almost 30%. And although China’s economy is slowing down, it is still growing.
“It is all relative,” said Tom Crotty, Director of INEOS’ communications. “It might be down to 3 or 4% growth, but we, in the West, would kill for that.”
Many in the West, though, continue to view China with suspicion and see it as a threat due to its ambitions to become a technological and economic global superpower.
It is a view that frustrates David Thompson, who moved to China after he was appointed CEO of INEOS Olefins & Polymers Asia.
“Life here is so different to what is reported in the media in the West,” he said. “Even though it is a communist regime and things are controlled, they are controlled with the people’s support because they see the benefits that come with it.”
And there are opportunities for all.
“If you are a young engineer looking to get the best experience quickly, then there is nowhere better than INEOS in China,” said David. “Anyone joining us has the opportunity to build some of the most technologically advanced engineering plants in the world.”
About 40% of the global chemical industry is now based in China.
INEOS is there, so too are Dow and BASF.
“If you want to be big players in the global market you have to invest in China or you won’t have a future,” said Tom. “Some companies do hold back and I’m sure that some will see us as naïve, but we take a different approach.”
And that approach boils down to trust.
“It takes time to build trust,” said Tom. “But, as in any relationship, you have to have trust or you may as well just walk away.”
In 2014 that trust was tested when INEOS sued state-owned Chinese oil and petrochemical company SINOPEC and some of its associated businesses for allegedly violating patents.
INEOS Chairman Sir Jim Ratcliffe said in a statement at the time: “We want to take our best technology to China but we need to know that it will be protected.”
INEOS, which had enjoyed otherwise excellent relationships with SINOPEC and with China, won the case – and, says Tom, SINOPEC’s respect.
Since then, the two companies have further strengthened their ties.
In 2021, INEOS bought into joint ventures with China’s largest petrochemical company after it acquired BP’s global acetyls and aromatics business for $5 billion.
The following year, INEOS signed three back-to-back deals, worth a combined $7 billion, with SINOPEC.
INEOS now owns 50% of two huge petrochemical complexes – one in Shanghai; the other Tianjin – and has a vested interest in two R&D institutes.
The latest joint ventures with SINOPEC will lead to increased production of high-density polyethylene (HDPE) and acrylonitrile butadiene styrene (ABS) to meet the needs of China’s rapidly growing domestic market.
“We have not just entered the market,” said David. “We have entered the market in a big way. And it is a big investment for both of us.”
In all, the two companies will jointly operate three ABS units, which will produce more than one million kilotonnes of acrylonitrile butadiene styrene every year.
One of the ABS plants has already been built by INEOS Styrolution in Ningbo, and this now forms another of the joint ventures with SINOPEC.
A second is now being built in Tianjin, using the latest technology, and it will be one of the most efficient plants in the world.
The location for the third ABS plant, which will also rely on INEOS’ world-leading technology, has not yet been agreed.
INEOS and SINOPEC will also be building a new plant in Tianjin to manufacture high-density polyethylene, with a further two in the pipeline.
“China is a country that is really growing and growing,” said Andrea Vittone, Vice President HDPE, at INEOS SINOPEC Tianjin Petrochemicals Ltd.
“They are building new cities and new infrastructure and they are replacing old pipes with new, made from HDPE.”
INEOS has been operating in China – in some capacity – for years.
In 2011 it began to forge closer ties when it agreed to sell 50% of its refining business in Grangemouth, Scotland, and Lavéra in France to PetroChina.
“The interest in China for INEOS has really been there since the beginning,” said David.
In 2005 when INEOS bought BP’s chemical assets for $9 billion – a deal which transformed INEOS’ business overnight – it had hoped BP would also sell its 50% stake in SECCO.
But although INEOS acquired a sales office in Shanghai as part of that deal, BP kept hold of its 50% share.
“We were disappointed not to get that, but BP would not sell it to us,” said Tom.
Twelve years later BP did sell it – to SINOPEC – for $1.7 billion.
INEOS says it will continue to seek opportunities in China.
“The business as a whole is constantly looking at opportunities,” said David.