CHEManager Europe 11/2012) Industry Shift to Asia    As the global economy gravitates eastward, at least half of the top 10 chemical companies in the world will be Asian or Middle Eastern by 2030 (Fig. 1), according to an A.T. Kearney analysis titled "Chemical Industry Vision 2030: A European Perspective" (c.f. page 6). As much as 66% of global chemical sales in 2030 will be in Asia, according to current growth patterns. The rise of emerging players, especially in Asia and in the Middle East, has led to a deconsolidation of the chemical industry. Until 2030, A.T. Kearney expects 5 to 8 of the global Top 10 chemical companies to come from these two regions, mostly from China.

Moderate Growth in Europe          From a manufacturing perspective, longevity in the chemical industry means sudden capacity shifts are unlikely. Chemicals are largely used for basic needs, such as construction, clothing, and agriculture. Specialty products such as batteries and nanotech will dramatically change specific value chains but will not change the overall demand picture because the combined volumes are small compared to increased general consumption in Asia. Production in Europe is expected to grow moderately with only consumer chemicals in marginally higher demand (Fig. 2).

Competitive Environment         By 2030, three forces will drive the global competitive environment: changes in competition, increasing economic volatility, and value networks moving east. In an effort to cater to the enormous Asian demand, customer industries are shifting operations to the East. Key end markets are all set to surge in Asia, driving growing local demand for chemicals. Domestic players that have taken advantage of Asian economic growth are now increasingly making the Fortune 500 list (Fig. 3). This is a serious challenge for incumbents, as the emerging players surpassed companies from established economies at a growth rate of 19% from 2002 to 2011.

Opportunities in Overseas Markets          Preparing for the future, chemical companies worldwide are wasting no time crafting their regional positioning strategies for 2030. Obtaining an accurate assessment of market attractiveness and size of their current footprint in each region is a good place to start. The current competitive environment suggests that European companies are well positioned in their home markets but have weak positions in overseas markets. As a result, significant opportunities exist overseas (Fig. 4).

Participating in Asian Growth           European producers are most interested in China for its potential and growth rates. NAFTA countries remain fairly attractive as a large, homogenous market where competition is fair; but, as in Europe, growth is slow. The rest of Asia (ROA) is a relatively fragmented and highly competitive market that is slightly less appealing than the NAFTA region. However, similar to China, ROA continues to be interesting because it has some of the largest and fastest-growing economies, including India, South Korea, Indonesia, Singapore, Malaysia, and Vietnam. Finally, Latin America, Japan, and the rest of the world (ROW) are at the bottom of the list for European producers. These markets do not have the size or growth potential of the others.