BASF cements footprint in Vietnam

Christian Mombaur, senior vice president of BASF Construction Chemicals Asia Pacific

How do you assess the potential for BASF’s growth in Vietnam’s construction market?

If I look at the market from BASF Construction Chemicals Asia Pacific’s point of view, it’s one of the fastest growing markets we’ve ever had. For several years now, Vietnam has had rather stable growth rates. According to the public data, we currently have a 6-6.5 GDP rate in Vietnam, which is one of the highest of all countries across Asia. This is a very strong rate of development, and the construction sector – one of the main contributors to Vietnam’s GDP – is showing close to double-digit growth. So as we look at the development potential of Vietnam, we are quite confident about our future here.

How can BASF’s products benefit local customers?

For customers in Vietnam, there are more and more questions about the sustainability of production, and one of these questions relates to faster construction. For instance, in Hanoi, a construction site can be particularly inconvenient as it is likely to cause obstructions on roads and produce a considerable amount of noise and dust, an experience which many are familiar with. However, our chemical products help to speed up the construction processes, minimise the disruption caused, and also bring down the construction time, so the next step in the construction process can be started and finished sooner. With older technology, we had to wait for 2-3 days before the concrete had dried sufficiently. With our technology we can reduce overall construction times by up to 30 per cent.

I think that’s the kind of innovation that we can bring to the Vietnamese market, which really helps to accelerate projects and bring total costs down, especially as each day in the construction process costs a considerable sum.

Does your second production plant for concrete admixtures, inaugurated in the northern province of Bac Giang last month (together with the one in the southern province of Binh Duong), indicate your long-term business commitments in Vietnam?

Absolutely, yes. We started with our first representative office here in Vietnam in 1994. However, we did not begin in construction; we were primarily focused on the importing of different types of chemicals from other countries into Vietnam. We then acquired a construction business and the production site was BASF’s first manufacturing plant in Vietnam. We have recently opened our second production site here in the northern region. So yes, our commitment to the local construction market is clear.

We see Vietnam as a growing market; we also see it as a market that makes good political decisions, evident in the recently signed TPP (Trans-Pacific Partnership), which will help to open the market even more.

And I think with the TPP and also with the FTA (free trade agreement) successfully signed with Europe that we, as a European-based company, would have greater access to the local market. You will see a second production wave coming from Europe to Vietnam, because it will be easier to export and import, and you will see a rise in high-quality production coming from Vietnam. It’s not just an issue of lower labour costs, it’s also about market insight, as well as the ease of doing business in Vietnam. This is why we are absolutely committed to the local market and we see great potential for growing our business in Vietnam.

How important is Vietnam in your business map, relative to other countries in the region?

BASF has a very strong footprint in China and it’s also our largest production setup, with a lot of production sites and joint ventures. However, we’ve never stopped looking for opportunities outside of China. At present, China is still growing, but growing at a relatively slower pace with numerous challenges remaining in its market. What that means for us is that we cannot concentrate on the Chinese market alone. Many ASEAN members fall into our sub-region, and within the ASEAN bloc Vietnam is considered the fastest-growing country and the one with the most stable development.

In terms of the construction market, Vietnam is the fastest-growing territory that we’re currently doing business with. For BASF as a whole, I’d say it [Vietnam] is our top prospect when we discuss markets in which to expand our portfolio.

What do you see as the future of BASF in Vietnam, from an investment point of view?

We have just received the second investment for our construction chemicals arm; with many more products to benefit the local market, we are quite committed to ensuring that this is not our last investment. Other areas like grouting or B2C (business-to-consumer) are also big opportunities to invest in Vietnam, as soon as the business picks up speed. I think that it also depends on the development of the TPP and other FTAs, because what we need is demand in the consumer area. The opportunities and potential for growth that the TPP and other FTAs will bring to Vietnam are also spurring us on to consider further development and investment in the Vietnamese market. We will continue introducing new innovations and products to the market to support the steady growth of Vietnam over the next few years.

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