While there are about 100,000 different fine chemicals produced globally, in China the number reaches only 20,000, according to the Xingyuan Chemical Park Research Institute. A paper by Shanghai-based chemical industry consultant Kai Pflug examines the status and trends related to China's Fine Chemicals industry in some detail.

“China's low share of fine chemicals has several disadvantages for China”, Kai Pflug states in his special report for the China Chemical Reporter (CCR). This means that China is a net importer of chemicals, with the value of its chemical exports equal to only about 72% of its imports, the experts continues. Moreover, the self-sufficiency is particularly low in high-end segments such as new chemical materials, which in 2018 reached a self-sufficiency rate of only about 65%. 

“China`s low share in fine chemicals is also a commercial disadvantage”, Pflug adds. Fine chemicals on average have higher profit margins than basic chemicals, as the number of competitors is smaller, the number of buyers is larger, the relative cost share for buyers of specialty chemicals is lower, and buyers often lack the knowledge to easily replace fine chemicals suppliers.

It is thus not surprising that the Chinese government is interested in supporting the development of local fine chemicals production, according to Kai Pflug, who is also a frequent contributing author for CHEManager. He adds: “However, establishing a strong fine chemicals industry in China is easier said than done. Main entry barriers for individual chemical companies include developing relevant R&D capabilities, establishing sufficient amounts of segment-specific application knowledge, gaining customers and a reputation for reliability and product quality among them.” His paper discusses the above and the most recent trends in China's Fine Chemicals segment in more detail.