ChemConnect's China Connection

Partnership with Chinese e-marketplace taps into $81.7 billion marketplace

San Francisco  July 2, 2001  ChemConnect is partnering with a Chinese e-marketplace to establish ChemConnect China, offering buying and selling opportunities in the $81.7 billion Chinese chemicals marketplace, the American company announced today.

ChemConnect's partnership with China Chemical City on the Internet (CCCOI), a Chinese online exchange with 20,000 members, will give ChemConnect a total of 40,000 members worldwide.

Originally established by the China National Chemical Information Center (CNCIC), which has worked hard to "digitalize" the country's B2B capabilities, CCCOI's supply and demand database is the country's largest, with 10,000 chemical products represented.

"Through this agreement, third-party chemical buying and selling opportunities, within, to, and from China will be e-commerce-enabled, " said John Robinson, ChemConnect CEO.

Li Zhong, CCCOI CEO, said that the partnership would allow the two companies to continue growing. "We will now be able to take full advantage of e-commerce opportunities and provide our Chinese members with an entry into the worldwide chemicals market with e-commerce capabilities across the entire supply chain," Li said.

ChemConnect expects that its Asian members would be the first to benefit from the new partnership, according to Brian Selby, ChemConnect's vice president for Asia. "Intra-Asia trading with Chinese companies from Korea, Japan, and India already account for nearly $19 billion a year," Selby said. "And U.S. fine and specialty chemicals manufacturers, which already sell $300 million a year worth of products into the Chinese marketplace, will almost certainly be among the first to get maximum benefits from these new opportunities."

Chinese Chemicals Industry

According to the China Customs Office 2000, China annually imports about $3.7 billion worth of U.S products, including agrochemicals, petrochemicals, industrial surfactants, and raw materials for pharmaceutical production.

The development of the fine and specialty chemicals industry, a priority for the Chinese government since the mid-1980's, forms the basis of other industrial growth, in areas including agriculture, health care, and electronics. The growth of the Chinese chemical industry  now more than $7 billion a year  was spurred by the lapse of European and North American patents on a wide range of products, including pesticides, dyestuffs, pigments, coatings, reagents, sensitive and magnetic recording materials, food and feed additives, adhesives, catalysts, and specialty additives and medicines.

However, because of the size of the Chinese market, and with steadily increasing demand for high quality, high-tech chemicals, internal production meets only an estimated 35 percent of needs. As a result, the government has established favorable tariffs (17 percent on fine chemicals versus 23 percent on other chemicals) and investment incentives to increase imports and attract more foreign investment.