Green roads to growth

By Yang Yang (China Daily)
Updated: 2012-12-07

Danish catalyst company Topsoe looks to the future with new plant in Tianjin

The first thing that struck Per K. Bakkerud when he came to Beijing in August last year was the dismal air quality and the grey skies. To his mortification, he found that there were thousands of buses and trucks on the streets spewing black gas mixed with particles into the air. But he was glad as it meant more business opportunities for his company.

Bakkerud, the managing director of Haldor Topsoe China, the Beijing-based subsidiary of the Danish catalyst company Haldor Topsoe A/S, sounds a bit apologetic when he says that the Beijing unit started operations only in 2010, although the company has been running businesses in China for more than 40 years.

"We could have grown faster if we had performed more actively in the last five years. But it also gives us the impetus to further expand and enhance our role in China," he says.

Bakkerud says the company expects to play a big role in realizing China's green goals and has installed its Topsoe catalyst system in more than 3,000 Beijing buses to reduce dangerous nitrogen emissions.

But it was not just the 3,000 Beijing buses that prompted Topsoe to locate its automotive catalyst-manufacturing unit in the port city of Tianjin, its third big plant after two in Denmark and the US.

"We were buoyed by the fact that China is working on legislation that may come into force from next year, making it mandatory for all buses and heavy-duty diesel trucks to install catalyst systems to help improve air quality," Bakkerud says.

Once the legislation comes into force, it would also mean that the millions of buses and heavy-duty diesel vehicles in China would have to install catalyst systems.

"We are talking about billions of yuan in money. Our ambition is to take a sizable share of the market, or something like an annual turnover of 500 million yuan ($80 million; 62 million euros) to 1 billion yuan from the Chinese market. There is no doubt that it is a huge and promising market."

In the field of automotive catalysts, Europe is now the largest market for Topsoe, followed by Brazil. But the company expects China to be the largest market in the next few years.

China is already the world's largest truck manufacturer and has the largest number of buses on the roads. Although not all of its buses run on diesel engines, there is still a huge market for catalyst companies.

In May the company decided to build its new plant in the Economic-Technological Development Area to further tap the market in China and the surrounding regions.

The company's total investment in the new facility is about $200 million (154 million euros), spreading over three phases of construction and covering 67,000 square meters. The first phase of the plant is expected to be operational by 2014.

The company initially plans to focus only on automotive catalysts in China, so that it is ready to seize the business opportunities that would come its way once the new legislation comes into force.

"Depending on various factors, we can also think of exporting catalysts to other markets. If we want to produce other kinds of catalysts in the plant, we will need to invest more," Bakkerud says. The planned volume capacity is 4,000 cubic meters a year.

Topsoe Synthetic Natural Gas technology now has a 50 percent market share in China, providing catalytic solutions for the power industry, chemical and the petrochemical industry and has a considerable market share in these segments.

China is estimated to account for 10 to 15 percent of total group turnover. "Our goal is to achieve 20 percent of the global turnover here in China," Bakkerud says.

China plays an important role in the group's ambitious growth plan, which is to double turnover every five years up to 2025. Now its global turnover is 5 to 5.5 billion yuan, and the goal for 2025 is 30 billion, Bakkerud says.

"I think the China targets are realistic considering that we now have a new plant in Tianjin. The market potential will be really huge because millions of buses and trucks in China will need catalyst systems, and there will be several players. I think it is a realistic expectation to grow by 20 to 25 percent a year here in China if you work smart and fast with the right people."

The big question for Bakkerud and his company is whether the legislation they hope for will indeed come into force next year.

"We hope that it will be implemented next year. Even if it is delayed again, we of course have to accept that and also we need to have the Tianjin plant up and running by then. I don't think it is catastrophic for us because we can still plan for the future. It is a future that will certainly come."

yangyangs@chinadaily.com.cn

(China Daily 12/07/2012 page16)