Covestro’s success a testament to China ties
German materials manufacturer Covestro is intensifying its commitment to the circular economy and decarbonization in China, building on robust partnerships with multiple stakeholders in one of its historically top markets.
Covestro’s relationship with China mirrors the deepening cooperation between the two nations, and plays a crucial role in helping businesses navigate uncertainty and unlock their potential. This is particularly evident in a global landscape undergoing eco-friendly transformations.
“Reflecting on my time with Covestro in China, I cherish the memories of collaborating with our partners to pioneer innovation, nurture business growth and propel our industry forward,” said Markus Steilemann, the company’s CEO.
“Covestro’s enduring success in China would not have been possible without the support of our stakeholders, including the governments of both nations. It underscores the pivotal role of robust government support in driving a company’s success in any market. Enhanced collaboration among governments, as exemplified by partnerships like Germany and China in such areas as supply chain resilience, has the potential to infuse much-needed momentum into the world of tomorrow,” added Steilemann, who also serves as president of the German Chemical Industry Association.
Rewarding journey
In the 1990s, Covestro’s predecessor, Bayer MaterialScience, strategically chose Shanghai as the site of its CISS integrated production facility, with construction commencing in 2001.
The company experienced rapid growth over the ensuing decades, responding to escalating demand amidst robust economic expansion in China and the Asia-Pacific region. In a bold move to fortify its presence in emerging economies, in 2010 Covestro announced an investment of 1 billion euros ($1.07 billion) to significantly expand capacity at the Shanghai site. A year later, the company also relocated the headquarters of its polycarbonates division from Leverkusen, Germany, to Shanghai.
Today, CISS stands as Covestro’s largest production site, with cuttingedge technologies to enable efficient operations, boasting 12 advanced plants covering all major products offered by Covestro. Additionally, the site uses renewable energy for more than 40 percent of its power consumption.
“The decision to expand in China after the global financial crisis proved to be a pivotal strategic move supporting our global business growth, especially capitalizing on the thriving Asia-Pacific market,” said Steilemann. “In this decade, our Shanghai site is set to continue to supply the regional and global demand with a complete portfolio of more sustainable materials and play a key role in driving the group’s ambitious target of being climate-neutral by 2050.”
A new chapter opens
Another notable milestone was reached in 2020 when the Shanghai headquarters were upgraded to include management, innovation, operations and investment. The site now houses the global headquarters of Business Entity Engineering Plastics, the Asia-Pacific headquarters of Business Entity Coatings and Adhesives, Business Entity Elastomers, as well as the Asia-Pacific functions including sustainability and innovation, procurement and information technology.
Starting in 2020, Covestro embraced the circular economy as a global guiding principle, committing to addressing challenges through innovative material solutions for sustainable development. The company aims to ignite new business momentum in dynamic markets such as electric vehicles, wind energy, photovoltaics, consumer electronics and construction, aligning with China’s ambitious environmental goals to achieve a peak in carbon emissions by 2030 and full carbon neutrality by 2060.
“We strive to cultivate stronger partnerships throughout crucial sectors along the entire value chain, establishing ourselves as pioneers advocating the circular economy and climate neutrality in the industry,” said Holly Lei, president of Covestro China. “Our goal is to provide a diverse range of solutions that contribute to supporting China’s green transformation. As the country rapidly progresses toward its carbon emissions targets, our commitment to achieving circularity takes on heightened significance and influence.”
High-performance team
The sustained success of Covestro in China, recognized as a Top Employer for six consecutive years, is deeply intertwined with its dedicated focus on people. The company’s diverse, experienced and engaged China team represents 12 nations and boasts an average tenure of 10 years. Notably, females account for nearly one-third of its staff members, with women holding more than 40 percent of the senior executive positions. These statistics underscore Covestro’s priority on advancing diversity, equity, and inclusion within its local team, fostering a preferred workplace environment for employees to showcase their full talent.
To support its workforce, Covestro China prioritizes employee well-being, exemplified by the presence of 40 employee clubs dedicated to physical and mental health. Additionally, it fosters employee development through an extensive array of internal training and educational initiatives. For more than 20 years the company has maintained a partnership with the Shanghai Modern Chemical Industry Vocational College, providing German-style vocational education through a “Dual System” that systematically combines the advantages of practical training in an operational plant with education at a vocational school. The partnership supplies 50 percent of the around 700 frontline production employees at Covestro’s Shanghai site.
Fruitful collaboration
Throughout the decades, Covestro has cultivated an outstanding level of collaboration with China, spanning diverse business operations including R&D, manufacturing and sales. By the end of 2023, the company’s investment in the Chinese market exceeded 4 billion euros.
In terms of innovation, the Polymer Research and Development Center, established in Shanghai in 2001, serves as Covestro’s Asia-Pacific innovation hub, offering worldclass support in R&D to global customers. Embracing the Open Innovation Hub concept, the center leverages partnerships to explore new business models and digital R&D.
Meanwhile, Covestro’s robust industry-academia-research network in China and the Asia-Pacific actively promotes innovation by engaging upstream and downstream partners, fostering the industrialization of scientific research results. For example, Covestro and Shanghai’s prestigious Tongji University have jointly overseen operation of the Covestro-Tongji Innovation Academy and a separate Chair for Sustainable Development for more than a decade. Covestro is also working with the Shanghai Institute of Organic Chemistry, Chinese Academy of Sciences, on chemical recycling solutions for polyurethanes.
In the latest development of this collaborative effort to support China’s ambitious climate objectives, Covestro forged partnerships with Chinese property developers and key industry collaborators during last year’s China International Import Expo. The projects focus on developing thinner and lighter polyurethane exterior wall insulation systems, as well as low-carbon, energy-efficient window and door systems tailored for ultra-low energy-consumption buildings.
“We are thrilled about the ongoing initiatives with our partners in China across various facets, which provide us with enduring opportunities,” said Lei. “We hope to advance sustainable, energy-efficient solutions leveraging Covestro’s material expertise to address some of the most pressing challenges. Through innovation, collaboration, and the courage to explore new avenues, we are actively contributing to mitigating climate change.”
As China continues its march to modernization, more long-term opportunities for German enterprises are becoming available. In the context of strengthened China-German economic and trade cooperation, both sides are actively pursuing partnerships in green development, transitions, and technologies.
“As a leading global materials company, Covestro possesses extensive knowledge and firsthand experiences across diverse markets to drive innovation in sustainability, which we will build on and share to advance the global transition toward full circularity,” said Steilemann.
“We aspire to sustain our collaboration with partners, utilizing our material expertise to contribute toward our collective aim of achieving a climate-neutral world.”