Speaking of 100-year-old companies in the world's petrochemical industry, DuPont in the United States is the most well-known oldest in my memory. It was founded in 1802, and as of this year, it has been 220 years old. If the year of DuPont's founding is marked by the publication of the Declaration of Independence in 1776 and the official announcement of the establishment of the United States of America, it is only 26 years younger than the United States. Of course, the country with the most 100-year-old companies in the world's chemical industry is Germany, with Bayer 159 years old and BASF 157 years old. The founding time of Bayer and BASF is even more interesting: Bayer was founded in 1863 and BASF in 1865, which is older than the German Empire established in 1871 when the German nation was unified under the leadership of the Iron Chancellor Bismarck! Although these two German companies suffered heavy losses in World War I and World War II, and even experienced the impact of a series of major events such as the 40-year division of the Federal Republic of Germany and the German Democratic Republic after World War II and the "reunification of East and West Germany" in 1990, companies such as Bayer and BASF have strived to seize every historical period, accelerate their own development, and have always been leaders in the world's chemical industry.
The United States and Germany have long been the world's two developed economies and pioneers of innovation in the world economy. Anyone familiar with the history of world chemical industry development knows that it was Germany that started the modernization of the world's chemical industry. From the second half of the 19th century until World War II, Germany has been the leader of the world's chemical industry for a hundred years; the United States gradually became the leader of the world's petroleum and chemical industry after entering the 20th century, especially after large-scale oil exploitation and the development of petrochemicals, or after the end of World War II. The number of chemistry awards won since the establishment of the Nobel Prize in 1901 can prove this point. In the first 50 years, Germany's chemistry awards were the sum of the awards won by the United States and the United Kingdom, while after the end of World War II, the United States' chemistry awards were far higher than the sum of the awards won by other countries, accounting for more than half of the country. Let's take a look at the glorious years of several representative companies with a history of more than 100 years:
The oldest Dupont
The first is the start. In July 1802, the founder DuPont founded a gunpowder production company, namely DuPont Company, in Wilmington, Delaware. From the second year, it began to produce and sell black gunpowder. By the end of the 19th century, DuPont became the largest explosives empire in the United States, controlling more than 90% of the US explosives market. At that time, the world's two largest explosives companies were: Nobel in Europe and DuPont in the United States.
Second, resume. After entering the 20th century, the world chemical industry continued to advance in synthetic chemistry, and new products and technologies of the chemical industry were continuously spread from Germany to Switzerland, Belgium, France, Britain and all over the world. At this time, the new head of DuPont had been replaced by the great-grandson of the founder 100 years ago. The new head saw that the chemical industry would be the future of the world, so DuPont made the first strategic transformation in history: from a gunpowder company to a chemical company. Because DuPont needed nitroglycerin and nitrocellulose in the process of producing explosives in the past, they continued to expand the chemical field based on the existing knowledge in chemical cellulose. At that time, through mergers and acquisitions, they quickly acquired the production capacity of paint, acetic acid, rubber, plastics and other products. In order to market these products, they once controlled General Motors. Before World War II, DuPont, in addition to its own research and development, successively put into production chloroprene rubber, nylon, acrylic resin, fluoroplastics and other products. After the end of World War II, everyone was familiar with DuPont after the second half of the 20th century. DuPont began to focus on chemicals and chemical synthetic polymer materials business. The world-leading products of DuPont that we are familiar with include nylon, polyester, high-density polyethylene, polyoxymethylene engineering plastics, special fiber Lycra, aramid fiber Kevlar, fluororesin Teflon, as well as chloride-based titanium dioxide, pesticides, medicines and pioneer seeds, etc. By the end of the 20th century, DuPont had become a global leading chemical and materials company in specialty chemicals, synthetic resins, synthetic fibers, high-performance fibers, special resins, high-end membrane materials, pesticides, seeds, etc.
The third is today. Today, DuPont separated fluorine chemicals and chloride-based titanium dioxide into Chemours (last year's operating income was $6.35 billion and profit was $680 million), merged with Dow, and then split off the new DuPont, which is positioned as a specialty chemicals company. Last year, its operating income was $16.7 billion and its EBITDA was $4.2 billion, making it one of the top 50 chemical companies in the world.
The world's largest chemical company: BASF
First, the beginning. Founded in April 1865, it was the "Baden Aniline and Alkali Factory (the predecessor of BASF)", which mainly used coal tar as the raw material to synthesize aniline dyes. With innovation, it expanded to anthraquinone dyes with coal tar as the starting material. When entering the gate of the 20th century, BASF had grown into one of the world's largest chemical plants and the world's largest dye manufacturer.
Second, resume. After entering the 20th century, the German government saw the extreme importance of the chemical industry and increased its strong support for chemical education, scientific research and the chemical industry. In the early 20th century, a group of German companies represented by Baden Aniline had the world's leading chemical synthesis technology, the dye industry had an overwhelming advantage in the world, and the synthetic ammonia and fertilizer industries began to take off. After the First World War, Germany continued to focus on the chemical industry during the reconstruction process, promoting the merger of the Baden Aniline Alkali Factory with eight companies such as Bayer and Hoechst at the time to establish I.G. Farben, whose operating income accounted for 1/3 of the total sales of the German chemical industry at the time. It not only produced dyes, but also synthetic fibers, artificial petroleum and other products. It was really a giant enterprise. IG Farben suffered heavy losses during World War II and was disintegrated in the early 1950s into three companies, of which Badische Anilin was one. In the 1960s, the new Badische Anilin formed joint ventures with Shell, Dow and others and built its own plant in Antwerp, starting the transformation from coal chemical industry to petrochemical industry and gaining a leading edge in the new plastics field. In 1973, it was officially renamed BASF, which should be the abbreviation of the original "Badische Anilin-und Soda-Fabrik AG". In the 1960s, while accelerating the strategic transformation of petrochemicals, BASF started a diversified business strategy. Through mergers and acquisitions and its own investment in plant construction, it simultaneously expanded into the fields of coatings, pharmaceuticals, pesticides, fertilizers and petrochemical organic chemicals and synthetic materials, especially mastering acrylic acid production technology, MDI and polyurethane material technology. In the 1990s, BASF began to withdraw from the coal business and officially transformed into a petrochemical-based business. It has comprehensive advantages in organic chemicals, fine chemicals such as pharmaceuticals and pesticides, acrylic acid and methyl methacrylate, plexiglass, new polyurethane materials, synthetic fibers, etc., and is a world leader. It has moved out of Ludwigshafen and expanded into the United States, Belgium, China, Spain, South Korea and other countries.
Third, today. Today, BASF is mainly a global leader in new chemical materials, special functional materials, fine and specialty chemicals, and nutritional chemicals. Last year, its operating income was 78.6 billion euros and its profit before interest, taxes, depreciation and amortization was 7.8 billion euros, ranking first among the top 50 chemical companies in the world.
Bayer has always been famous
First, the company was founded in August 1863, when it also produced aniline dyes using coal tar as raw material. More than 20 years later, it began to develop new businesses such as chemicals.
Second, resume. In the late 19th century, the painkiller aspirin (chemical name: acetylsalicylic acid) was successfully developed, and it is still sold worldwide as a painkiller and blood anticoagulant health product. After the First World War, it merged with BASF and others to form IG Farben. After the Second World War, IG Farben was dismantled, and Bayer started a new business as a pigment company. In the 1960s, Bayer officially entered the petrochemical industry. Affected by the first oil crisis in the early 1970s, Bayer increased its acquisition and merger efforts around the world in the late 1980s. At the beginning of the new century, Bayer was once the world's largest synthetic rubber manufacturer and the world's largest polyurethane raw material isocyanate and polyol manufacturer, and became a world leader in the fields of medicine, pesticides, and specialty chemicals. After entering the new century, Bayer found that after rapid expansion, its scale and volume had increased, but its efficiency had deteriorated, and its annual profit had suffered huge losses. Therefore, from the beginning of the new century, Bayer started its own business divestiture and reorganization; focusing its business on four sectors: pharmaceuticals and health care, crop science, polymers and chemicals. In 2004, it split off the synthetic rubber and chemicals business to form Lanxess (last year's sales were 7.56 billion euros), and operated independently in 2005; 10 years later, in September 2015, Bayer split off another new company: Covestro (last year's sales were 15.9 billion euros) mainly from the engineering plastics polycarbonate and MDI, TDI, polyols and polyurethane-related businesses of Material Science. Since then, Bayer has focused on the fields of life sciences, medicines and pesticides.
The third is today. After completing the acquisition of Monsanto in June 2018, Bayer today has become the leader of the world's "four major pesticide companies". Last year, Bayer's operating income was 44.08 billion euros and its net profit was 1 billion euros, making it the second largest multinational chemical company in Europe after BASF.
There are only a handful of centenarian companies in China.
1. Modern historical reasons and late start of industrialization lead to few 100-year-old enterprises
Compared with the first industrialized countries, we not only missed the historical opportunities of the first and second industrial revolutions, but also suffered from wars in the first half of the 20th century, fighting for national independence and people's liberation. In the early 20th century, when national sages such as Fan Xudong and Wu Yunchu were determined to develop national industry through "industrial salvation", warlords were fighting and people were living in poverty. There was no pure land to accommodate research and innovation, and there was no environment and conditions for industrial construction and development. China truly started the industrialization process after the victory of the War of Resistance Against Japanese Aggression and the liberation of the people. The founding of New China, under the leadership of the Communist Party of China, laid the foundation for national industrialization, created a favorable domestic and international environment and conditions, and opened a new period of socialist transformation and construction. After the reform and opening up, China's industrialization really moved forward rapidly. Therefore, there are very few domestic enterprises that are more than 100 years old.
2. Most of the enterprises established a hundred years ago have been struggling
Looking back at the history of China's national industry, in fact, after the feudal monarchy was overthrown, a large number of national entrepreneurs also opened production plants, and many small chemical production enterprises were also born in various places. The most representative regions are Shanghai, Tianjin, Shandong, Jiangsu and other places. Representative enterprises include paints, pigments, rubber, acids and alkalis, synthetic ammonia, etc., such as Shanghai Kailin Paint Factory, Zhengtai Rubber Factory, Greater China Rubber Factory, Far East Alcohol Factory (later Shanghai Solvent Factory), Dazhong Dye Factory, Weixin Chemical Technology Society (later Qingdao Dye Factory), Jinan Yuxing Pigment Factory (later Yuxing Chemical Factory), Dahua Pigment Company, Jinan Tianfeng Pigment Factory, Huafeng Pigment Factory, Weihai Zhongwei Rubber Factory, Tongtai Rubber Factory, etc. were established one after another. The most familiar, influential and well-known ones are Fan Xudong's Yongli and Wu Yunchu's Tianyuan. Unfortunately, many small and medium-sized chemical companies established in the first half of the 20th century went bankrupt due to war, some due to poor management, and some due to name changes have faded from people's memory. Today, the petrochemical system is related to Tianyuan founded by Wu Yunchu in 1929, the "Tianyuan Chemical Plant" under Shanghai Chlor-Alkali and the "Chongqing Tianyuan" and "Yibin Tianyuan" where Wu Yunchu moved west during the Anti-Japanese War. Another one is related to "Yongli" founded by Fan Xudong in 1917, which is today the "Yongli Chemical Company" of Tianjin Bohai Chemical. Although the scale of Tianyuan, Chongqing Tianyuan and Yibin Tianyuan of Shanghai Chlor-Alkali is much larger than that of the past, and the technical and management levels are much higher, the leading products have not lost the chlor-alkali that they started with; Yongli of Tianjin Bohai Chemical has also expanded in scale and business, but it has not lost the soda ash that it started with. Jinan Yuxing Pigment Factory, founded in 1922 and later renamed Yuxing Chemical Factory, was once a leading domestic chromium salt enterprise in the 1980s and 1990s, and its main product has now transformed into titanium dioxide. The Shanghai Kailin Paint Factory, founded in 1915, is currently affiliated to the Shanghai Paint Company and is operating well. The Greater China Rubber Factory and the Chint Rubber Factory have merged into today's Shanghai Tire and Rubber Company. Both factory names no longer exist. It seems that the factory area of the Greater China Rubber Factory has now become a street garden, a morning exercise venue for Shanghai citizens with a beautiful environment and fresh air.
3. Today's backbone enterprises are setting sail for a long journey
Today, there are a number of backbone enterprises that have been established for less than a hundred years, but they are all working hard to build a century-old enterprise. From the order of establishment: the first is CNPC (China National Petroleum Corporation). The history of CNPC can be traced back to the Ministry of Petroleum Industry established in July 1955. From June 1970 to March 1978, it experienced the changes of the Ministry of Fuel and Chemical Industry (abbreviated as: Fuel and Chemical Ministry) and the Ministry of Petrochemical Industry (abbreviated as: Petrochemical Ministry). In 1978, the Ministry of Petroleum was re-established. Ten years later, in June 1988, the Ministry of Petroleum was abolished and China National Petroleum Corporation was established. At that time, it was mainly responsible for the exploration and exploitation of upstream oil and gas; then in 1998, the business of the two groups was reorganized, and they respectively had the entire industrial chain of upstream oil and gas exploration and exploitation, midstream oil refining, and downstream chemicals and polymers. From a geographical point of view, CNPC was accustomed to being called "Northern Company" at that time. Last year's operating income was 2.6 trillion yuan, and the net profit attributable to the parent company was 92.17 billion yuan.
The second CNOOC (China National Offshore Oil Corporation) was established in February 1982. At that time, it was mainly for foreign cooperation in the exploitation of offshore oil resources. It was fully responsible for the exclusive rights of oil exploration, exploitation, production and sales in the cooperative sea area. Later, with the deepening of reform and opening up, it also achieved "landing" and built a large base in Hainan to produce urea and methanol with natural gas chemicals, and built a large refining and chemical integration base in Huizhou Daya Bay in a joint venture with Shell. Last year, the operating income was 246.1 billion yuan, and the profit attributable to shareholders was 70.3 billion yuan.
The third Sinopec (China Petrochemical Corporation) was established in February 1983 by the decision of the CPC Central Committee and the State Council. 39 petrochemical enterprises managed by the former Ministry of Chemical Industry, Ministry of Petroleum and Ministry of Textiles were assigned to Sinopec. At that time, its main business was oil refining and its downstream chemicals and "three major synthetic materials (synthetic resin, synthetic fiber, synthetic rubber), and it did not own upstream crude oil and natural gas exploration and production; in 1998, the institutional reform led by the State Council led Sinopec to reorganize with then PetroChina, which is the above-mentioned no longer divided into upstream and downstream industrial chains, and each owns oil and gas fields and refining enterprises in its respective regions based on regional layout. The two companies are integrated groups with upstream oil and gas exploration and production and downstream refining and chemical businesses. At that time, people used to call Sinopec "Southern Company" from a geographical point of view. Last year's operating income was 2.74 trillion yuan, and the net profit attributable to the parent company was 71.2 billion yuan.
At present, there are still many enterprises in the petrochemical industry with outstanding main business, strong innovation ability and core competitiveness, high management level and great development potential, such as Shanghai Huayi, Shaanxi Yanchang, Zhejiang Juhua, Tianjin Bohai Chemical, Yantai Wanhua, Zhejiang Xinhecheng, Shandong Dongyue, Gulf Group, etc., which are all strengthening their main business and core competitiveness, strengthening innovation and international operations, striving for progress and making solid progress towards the centenary vision. I will not elaborate on them one by one here. The total operating income of the three backbone central enterprises, CNPC, Sinopec and CNOOC, accounted for 39.6% of the total industry last year, and the total profit accounted for about 1/4 of the total industry; in terms of age, CNPC is the eldest son since the Ministry of Petroleum, 67 years old, CNOOC is 40 years old this year, and Sinopec will celebrate its 40th birthday next year, all in their prime! Whether it is for the development of the national economy, or for the transformation of new energy and national energy security, as well as for the support and guarantee of agricultural production and harvest, high-end manufacturing and strategic emerging industries, the backbone petrochemical enterprises have made extremely important contributions!
The inspiration brought to us by century-old enterprises
Looking at and analyzing the growth and development history of an enterprise, we will find that its ability to grow into a century-old enterprise, especially during its century-long history, has always been highly competitive no matter in which historical period and has always been a leader in its business field, is the result of the combined effect of multiple factors: strategy is important, decision-making is important, management is important, and corporate culture is also important.
Strategy is related to the long-term and future, and is closely related to decision-making and implementation. Sometimes there will be deviations in strategy, but as long as it is corrected in time, it will get back on track; but mistakes in decision-making or ineffective implementation (execution) may cause enterprises to fall into difficulties. The current epidemic is raging, logistics are not smooth, production has been severely affected, and the global supply chain has been frustrated. Since the end of February this year, there have been sudden regional political conflicts, which have made the supply chain worse. The prices of bulk raw materials and petrochemical products have risen again on the basis of last year's sharp rise; this situation has greatly increased the investment enthusiasm of many companies. Many products that originally had overcapacity can now be described as "huge" in terms of new, planned and expanded capacity. I believe that they have all been studied and demonstrated, but I don’t know whether such decisions and implementations are in line with the company’s existing main business and advantages? I don’t know what the market will be like when it is completed in 2 or 3 years? When the new capacity is put into production in 2 or 3 years, will we be happy? Will some companies have to shut down again in 3 years! This is the topic that we need to think about in terms of strategy, decision-making and implementation before us today. The historical experience and lessons of more than 150 years since the Second Industrial Revolution opened the era of accelerated industrial development tell us that economic development is cyclical. When the market environment cools and the demand side shrinks, the most important thing for enterprises is to focus on innovation and excellence. If they do not focus on future competitiveness and pursue counter-cyclical expansion of scale, they may fall off a cliff if they are not careful. In particular, new construction and expansion of production capacity for products with excess production capacity must be done with extreme caution. Management and corporate culture will not take up space here. Let's focus on a few common inspirations brought to us in the process of sorting out representative century-old enterprises:
1.Innovation is the primary factor in establishing a century-old foundation
People often say that innovation is the inexhaustible driving force for the progress of human society. For an enterprise, it is also the source of power for long-term prosperity and core competitiveness. "Why is the water so clear? Because there is fresh water from the source." The Yangtze River and the Yellow River flow endlessly and roll forward because of the inexhaustible source upstream! Innovation is the "Qinghai-Tibet Plateau" of a century-old foundation. The above talks about several representative century-old enterprises familiar to petrochemical people. Every reader also has century-old enterprises in other fields that he is familiar with. For example, DuPont has 220 years, BASF has 167 years, Bayer has 169 years, DSM has 120 years, Dow has 125 years, Sumitomo Chemical has 107 years, etc. These century-old enterprises that have always been the leaders of the world's chemical industry have been based on innovation since the day they were founded. In every subsequent stage, they have relied on innovation to make progress, and in every period, innovation has been placed at the top of development strategies and measures. The first one is DuPont, the oldest one. DuPont was founded in 1802 because E.I. DuPont mastered the technology of gunpowder production as an apprentice in the Lavoisier Laboratory in France, and then immigrated to the new United States and built a gunpowder factory on the Wilmington River in Wilmington. 100 years later, in 1902, the new head of DuPont decided to transform into a chemical company. At that time, mergers and acquisitions accelerated DuPont's strategic transformation into a chemical company, but the key factor was innovation! Because at the same time as the decision to transform, the earliest industrial laboratory in the United States was established: DuPont Eastern Laboratory. In the second year, in 1903, it established its own research center: DuPont Central Laboratory. In 2019, the author led a team to visit DuPont's headquarters in Wilmington. The Central Laboratory consists of 43 buildings. For more than 100 years, it has been DuPont's global research and development headquarters. DuPont people themselves call it "the heart of DuPont"! After a full exchange of ideas, DuPont scientists accompanied us on a tour. Whether it was the planning and layout, the design and division of labor of each building, or the analytical testing instruments and equipment of the innovation center, many members of our delegation were amazed. DuPont's R&D expenses have long accounted for more than 5% of its sales revenue. Different development stages have established the focus of R&D and investment. At the end of the 20th century and facing the 21st century, DuPont's innovation highlighted the three key areas of polymer science, health science and agricultural science, followed by electronic materials and specialty chemicals. It is precisely because of DuPont's strong innovation that it was the first in the world to invent nylon and start a new revolution in synthetic fibers; nylon, polyester, specialty fibers, engineering plastics, high-performance membranes, biotechnology, display materials, etc. were all innovated or first industrialized by DuPont; the article "Learning from History, Creating the Future" also talked about DuPont's leading innovation in bio-based chemicals and chemical waste plastic recycling, especially its monopoly in the world of bio-based 1,3-propylene glycol. It is innovation that has ensured that DuPont has been a leader in the world's chemical industry for 220 years.
Bayer also started out by innovation. When Parkin discovered synthetic dyes, it was the Bayer Research Laboratory that first synthesized the natural dye alizarin from anthracene in coal tar, and applied the oleum sulfonation synthesis process for the first time, and soon became the leader in synthetic dyes. In 1897, Bayer synthesized acetylsalicylic acid through innovation, which is aspirin, an analgesic and blood anticoagulant drug that has been used since 1899 and is still a best-selling drug in the world. Bayer has always attached great importance to R&D and innovation. For a long time, R&D investment has accounted for more than 7% of sales, reaching 8.5% or more than 10% in some years, and R&D investment has long remained one of the highest among global chemical companies. Bayer has always taken innovation strategy as the leading factor for future development. In order to strengthen innovation, Bayer Innovation Company was specially established in Düsseldorf, which is mainly responsible for basic innovation and strategic research. When a new idea is verified to be feasible through basic research, it will enter the next stage, the Bayer Technology Center or a special technical service company, and will enter the laboratory for further amplification experiments or engineering development. Innovation strategy has always ensured Bayer's world leading position. Bayer once made a statistic: about 40% of sales revenue was created by new products that were put on the market for less than 10 years. Many of our chemical colleagues know that many chemicals and synthetic materials were invented or first industrialized by Bayer. In 1910, Bayer first industrialized synthetic rubber (one of the leading products of LANXESS that was later split off), successfully developed polyurethane series adhesives, coatings, foaming materials and high-elastic fibers in 1937, and successfully developed polycarbonate high-performance engineering plastics in 1953 (these were the leading products of Covestro that were later split off), developed ABS multi-purpose thermoplastics in 1956, and later medicines, pesticides, biological agents, etc. Bayer has been a lighthouse company at the top of the pyramid by strengthening innovation and long-term in the fields of materials science, coatings, adhesives and sealing materials, medical care and diagnostic reagents, animal vaccines and veterinary drugs, and agricultural pesticides, herbicides, fungicides, etc.
Let's look at another company that was established less than a hundred years ago but has strong innovation: Mitsubishi Chemical. Mitsubishi Chemical was established in October 1994 and was formed by the merger of Mitsubishi Chemical and Mitsubishi Petrochemical. To trace its historical origins, Mitsubishi Chemical originated from the Japanese Tar Industry Company established in 1934, and Mitsubishi Petrochemical was established in 1956 to produce polymer materials. Today, Mitsubishi Chemical has strong competitiveness in synthetic resins, engineering plastics, high-performance fiber materials, new energy battery materials, as well as electronic chemicals, information chemicals, food additives, and medical and health care. Last year, Mitsubishi Chemical's performance: estimated revenue value of approximately US$29.7 billion and estimated profit value of approximately US$2.2 billion. I am deeply touched by Mitsubishi Chemical's innovation, especially their emphasis on future innovation: In October 2017, the author led a team to visit Mitsubishi Chemical. The chief technology officer, Mr. Setoyama, who communicated with us, started with the following: What does the world need in the 21st century? What should the goal of science/chemistry be? Then he discussed with us: How will the world change? How will Japan change? What should we create? How should we create? It also further analyzed the economic growth of the world and major economies in 2040, population dynamics, global energy consumption and the proportion of new energy, and the cost of various energy sources, and made predictions. It also made predictions for the earth and human living environment in 2100 and carbon reduction targets. The conclusion of the discussion was that "the raw material and energy structure dominated by coal in the 21st century is no longer sustainable"; then it accompanied us to visit Mitsubishi Chemical's "Comfort Plaza", and introduced to us one by one the displayed hydrogen storage cylinders made of carbon fiber composite materials, car panoramic sunroofs made of bio-based polycarbonate, packaging film materials made of bio-based degradable materials, photovoltaic power generation and battery diaphragms, as well as health care drugs, pharmaceutical intermediates, vaccines, diagnostic reagents, cell repair materials, etc. What impressed me most were the oxygen 18 special water, the three-dimensional demonstration device for soilless vegetable cultivation, and the artificial photolysis water hydrogen production test. At that time, artificial photolysis water hydrogen production had been listed as an innovative project supported by the Japanese government. The key is the preparation and efficiency of the catalyst and the membrane and molecular sieve for hydrogen and oxygen separation and purification. They designed hydrogen and industrial (steel mills/power plants/coking plants, etc.) to capture carbon dioxide, oxygen and methane to react separately to obtain synthesis gas, and then produce methanol or olefins through synthesis gas, and then a series of organic chemicals, fine chemicals and polymers can be synthesized. Today, when we are discussing hydrogen energy, we realize that the hydrogen obtained in this way is the real green hydrogen. When such technology matures and passes the economic test, it will be possible to truly realize the coupling of hydrogen and petrochemical industry to replace fossil raw materials for hydrogen production and reduce carbon, and it will also be possible to make hydrogen energy a clean energy for mankind in the future. Others include LG Chem, SK, SABIC, etc., which have been visited and exchanged and impressed me in terms of innovation. Although these companies are less than a hundred years old, it is only a matter of time. They will definitely be a century-old foundation in the long river of history.
2.Transformation and upgrading is the most important measure for a century-old enterprise
With the progress of society and the development of the times and economy, timely transformation and upgrading in innovation is an important strategic measure to build a century-old enterprise. When BASF was founded 157 years ago, it was a company that produced aniline dyes using coal tar as raw materials. After more than 30 years of innovation, it developed into the world's largest dye production company at the beginning of the 20th century. After entering the 20th century, with the acceleration of innovation, transformation and upgrading also continued to accelerate. At that time, engineer Bosch helped Haber, director of the Royal Institute of Berlin, to successfully industrialize synthetic ammonia in 1913, and Germany's production reached 200,000 tons in 1918; urea was synthesized in 1922, and methanol was successfully developed in 1923. Subsequently, polystyrene, polyacrylonitrile, polyacrylate, polyvinyl chloride, polyisobutylene, butyl rubber, etc. were successfully developed. BASF also timely transformed and upgraded its products from a dye production company to emerging fields such as inorganic chemicals, synthetic materials, and synthetic rubber. After the end of World War II, petrochemicals entered a period of rapid development. In the 1950s, BASF began to enter the field of petrochemicals, accelerating the transformation of coal chemical industry to petrochemical industry, while accelerating the development of fine chemicals and new polymers, further expanding the new product fields of vitamin A, medicine, coatings, pesticides, etc., successively realizing large-scale synthetic ammonia and methanol, and successfully developing and industrializing phthalic anhydride, melamine, acrylic acid, and MDI. BASF also accelerated acquisitions and mergers, further transformed and consolidated its advantages in new synthetic materials, engineering plastics, high-end fine chemicals, etc., and once entered the field of oil and gas exploration and mining. Since the 1990s, divestiture and restructuring have been launched. First, it withdrew from the coal business in 1991, and then withdrew from the pharmaceutical business and some synthetic fiber monomer businesses in the 21st century. Today, BASF is a multinational company focusing on new chemical materials, specialty chemicals, nutrition and care, agricultural solutions, etc. Looking at the two integrated bases of Nanjing Yangba and Zhanjiang, Guangdong, and the Chongqing factory, Shanghai factory and science and technology innovation center deployed by BASF in China, you will have a nearly complete understanding of the main business structure of BASF today.
Transformation of DuPont: In the first 100 years after its establishment, it was a gunpowder company. In the second 100 years, it adapted to the rapid development of synthetic materials and the huge demand for synthetic fibers and new materials in society, and accelerated the transformation from a gunpowder empire to a chemical and materials company. In the 1980s, DuPont relied on independent innovation and development, while also accelerating mergers and acquisitions and restructuring, and had developed into a comprehensive large multinational company. In the 1990s, DuPont gradually withdrew from upstream energy and oil and gas businesses, and also gradually withdrew from refining, pharmaceuticals, ordinary polyester and textile businesses. In the 21st century, DuPont also divested the fluorine refrigerants, fluorine chemicals and titanium dioxide businesses from Chemours. In other words, DuPont became a leader in synthetic fibers, new materials and specialty resins, high-end membrane materials, and special fine chemicals in the 20th century (the second century); when entering the third century, DuPont announced that it would accelerate its transformation into a life science company; of course, the new DuPont, which was split off after the merger with Dow on June 1, 2019, is positioned as a specialty chemical company.
When DSM was founded 120 years ago, it was a coal company established by the Dutch government for energy security. Starting from coal and coal chemical industry, it gradually developed coke oven gas, fertilizers, rubber and plastics, fine chemicals and high-performance materials. Last year, it reorganized its high-performance materials business and today has transformed into a leading company in nutritional chemicals, pharmaceuticals and specialty chemicals.
Solvay, which is familiar to everyone, got its start in 1861 with the successful innovation of the "Solvay Process", which was more competitive than the original Rübrand process because of its easier-to-obtain raw materials, less pollution, and less fuel consumption. Before the publication of Houdebang's "Soda Ash Manufacturing", it monopolized the world's soda ash market for more than 70 years by relying on technological blockade. However, Solvay's leading industries today have been completely transformed into new chemical materials and functional chemicals. Its hemodialysis materials, liquid crystal display materials, and information chemicals are highly competitive globally.
When Sumitomo Chemical was founded in 1915, it was a company that produced fertilizers using by-product sulfurous acid. Over the past 107 years, it has continued to innovate, transform and upgrade. Today, it is dominated by petrochemicals and basic chemicals. Its pesticides, herbicides, fungicides and plant growth regulators are world leaders. Its feed additives, pharmaceuticals, synthetic fibers, synthetic resins and other fine chemicals and high-end new materials also have strong market competitiveness.
3.Internationalization is the only way for a century-old business
Internationalization is an important manifestation of a company's operating level, management level and competitiveness. The import and export business of certain products is only the basic manifestation of internationalization. Internationalization is mainly the global layout and global operation of enterprises. The internationalization of enterprises is like whether an athlete has really come to the Olympic Games. Only after running can you know how many seconds slower than Bolt? Only after hitting can you know how many points you are behind Federer? If you are good at summarizing experience, you will further know the reason why you are slower than Bolt: is there a gap in the start, or is there a problem with the sprint? You will also know that you are so much behind Federer: is there a gap in the serve, or is there a problem with the return? Is it not enough hitting force, or not enough hitting speed? In this way, you can see the gap, find the gap, and then work hard to correct it and practice repeatedly, so that you may stand on the podium in the next Olympic Games. Therefore, it is important for corporate management to sit in the same venue and communicate with multinational companies, and discuss business cooperation in the same conference room. It is also important to compete with multinational companies under the same raw material costs, labor costs and the same rules of the game. Looking at the century-old enterprises, they all stand on their own leading industries, highlight their own competitive advantages, and go to the international stage in a timely manner to start the road of international operation when they have developed to a certain stage. DuPont began its transformation in the 20th century. By the 1960s, when it had a leading edge in chemicals and materials, DuPont first started its internationalization strategy of mergers and acquisitions and investment in plant construction, starting from Europe. By the end of the 1970s, DuPont's overseas revenue accounted for nearly 1/3 of its total sales. By the end of the 1980s, this proportion increased to about 40%, making it the world's largest multinational company at the time.
Dow Chemical was founded in May 1897. At the beginning, it was based in China to engage in the production and sales of bleach. In 1906, it began to produce agricultural chemicals, and gave full play to the special advantages of chlorine, a key raw material in the production process of bleach, began product transformation, and gradually developed bromine-containing chemicals and new plastics, synthetic fibers and other product areas; since the end of World War II, Dow first took international steps from its North American neighbor Canada, and entered Europe in the 1950s, investing in factory construction on the one hand and mergers and acquisitions on the other. By the mid-1970s, Dow's overseas operating income had accounted for nearly half of the country, making it a veritable multinational company; since then, relying on its own strong innovation capabilities, it has gradually industrialized and expanded its business areas such as super absorbent resins, metallocene polyolefins and elastomers, a complete acrylic acid industry chain, and pharmaceuticals, pesticides, and functional chemicals.
Mitsubishi Chemical's predecessors, Mitsubishi Chemical and Mitsubishi Petrochemical, both built factories and conducted business in Japan when they were first established. As the company developed and its business expanded, it first began to internationalize in the United States. After it officially merged into Mitsubishi Chemical in 1994, domestic mergers and acquisitions and international operations accelerated simultaneously. It had a joint venture with Sasol to produce acrylic acid and its esters in South Africa, and had joint ventures in India and South Korea to produce PTA. After entering the new century, Mitsubishi Chemical has developed into a multinational company with production bases and business operations in many countries including the United States, Europe, and Asia. Especially since the new century, Mitsubishi Chemical has further increased its global growth strategy plan, and the proportion of overseas revenue has further increased to about 30%.
Of course, today's international environment and rules are very different from those 50 years ago, and even very different. In particular, in recent years, trade protectionism and anti-globalization have risen, and international industrial division of labor and cooperation are facing new challenges. The spread and impact of the epidemic in the past two years have severely impacted the orderly operation of the global supply chain and industrial chain. This year's regional conflicts have exacerbated the risk of supply chain and industrial chain interruption. With the superposition of all these factors, the global industrial chain and supply chain are actively or passively accelerating adjustment and reconstruction. The more severe and complex the new situation and new challenges are, the more we need to think seriously, scientifically plan and accelerate the internationalization of business. Today's internationalization of enterprises should not only learn from the experience accumulated by multinational companies in the past, but also be based on the new background and new challenges of the times, face the future, plan for the future, and strengthen the core competitiveness of enterprises in international operations and management. We do have some companies that have been engaged in international business for many years and have accumulated some experience. Some are also planning overseas business or international exploration. Compared with multinational companies investing and developing in China, our companies invest in factories and international operations in developed countries such as Europe and the United States or raw material production areas. Look around us, DuPont, BASF, Mitsubishi, Solvay, BP, ExxonMobil and other world-class companies mentioned above are all around us. There are also many companies with strong engineering capabilities such as Honeywell, UOP, Topsoe, KBR, and Sunbright that are not mentioned. They have rich international experience and are also integrated into the domestic market and the torrent of economic development. Some multinational companies' revenue in China has exceeded their performance in China. Many multinational companies' business in China during the epidemic has become the brightest part of the world and the ballast stone for the global fight against the epidemic risks. It has truly achieved "the East is bright when the West is not bright"!
To build a century-old enterprise, we must have both vision and action. Many companies over the age of 100 are worth studying. In their journey, they have both successful experiences to learn from and many lessons to learn. Experience and lessons are equally valuable. They can help us avoid detours and have fewer hardships and more joy on the journey to the century-old years. Today, there are indeed fewer centenarian companies in China, but many young and middle-aged companies are moving towards their first century and planning a brighter future for the next century! Let us work together to strengthen innovation, make enterprises stronger and better, and lay a solid foundation for a petrochemical power.
Author of this article: Fu Xiangsheng, Vice President of China Petroleum and Chemical Industry Federation
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