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Surviving in China’s Chemical Industry: A Guide for International Chemical Companies

Chemical industryAlthough China’s chemical industry growth has receded, the region continues to remain the most profitable for most global chemical companies. The colossal size of the chemical industry in China should not be blindly associated with the sector’s stability. The industry is in the midst of a profound rapid transformation due to stringent investment pools, stricter environmental laws by the government, and changing consumer-demand trends. Furthermore, increasing economic turbulence in the region since mid-2018, related to China’s economic slowdown and the turbulent US–China trade relations, adds new uncertainties in the chemical market dynamics.

China’s economy is currently moving to a new era of development. After the headlong market expansion in the early 2000s, the chemical market is now focused on consolidated and selective growth. As overcapacity in one of the existing challenges faced, companies looking to make fresh investments in the chemical industry are faced with a more selective appraisal from the Chinese authorities.  Moreover, intensifying competition from the local Chinese chemical market companies who are at advantage due to their lower production costs compared with imports and their greater ease in establishing relationships with key customers poses greater challenges for international chemical companies in China. As critical changes are underway in the chemical market in China, players will have to adopt a new set of strategies to survive and ensure continued growth.

Industrial policies and changing demands in China’s chemical industry is stirring new trends and growth opportunities for players. Request a free proposal for more insights on how your business can capitalize on them.

Attaining profitable growth in China’s chemical market

Chemical industryPrioritize products matching domestic requirements

China’s growth prospects in the future of chemical industry cannot be denied, but the changing chemical market dynamics make market opportunities more nuanced for international companies. This means that international chemical companies need to learn to adapt. One approach to achieve this is to focus on products that match the domestic needs and that the Chinese state is promoting. Chemicals are crucial enablers for strategic growth in industries that China prioritized to gain a major market at a global scale. This includes sectors such as electric vehicles, new energy technologies, and civil aviation among others. International chemical companies must aim to become China’s trusted partners in their innovation plans to bridge technological gaps and set environmental standards in sectors that have a major government backing.

Proactive stakeholder management

International companies that seek to establish their business in China’s chemical industry will need extensive approvals and support from several stakeholders both across the regulatory as well as the business landscape. Ergo, effective stakeholder management becomes vitals especially in the case of building new plants and new product introductions, especially in the regulated products category.  As China currently does not have a process to legitimize the proposed chemical industry investments in a community, the concerns of environmentalists and local communities can only be addressed through hands-on stakeholder management. International companies operating in China’s chemical industry have already set up dedicated teams to identify and manage all the key stakeholders affecting their business.

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Re-engineering the existing go-to-market strategies

China’s business landscape is highly relationship driven. So, having a local presence in the country becomes important to capture value from new market opportunities. Companies must seek to establish a tailored distribution approach. Appropriate distribution partner network enables international players in the chemical industry to get closer to customers and also differentiate their products in the increasingly competitive chemical market in China.

Building strategic M&A partnerships

M&A partnerships are the strategic approach to grow more quickly and extensively in the chemical industry in China. This will enable chemical companies to gain organic growth through increased market access and also fill product or technology gaps. Several dynamic mid-sized chemical companies have emerged in China over the recent years. This could present attractive acquisition opportunities for international chemical companies. A dedicated business development team in China can help international players in the chemical industry better meet these motives.

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Gaining Profitable Growth in China’s Chemical Market: Imperatives for International Chemical Companies

China’s chemical industry overview

Although the economic expansion in China has slowed down over the past few years, it still remains a key growth market for most global chemical companies. Industry experts believe that over the next decade, China will continue to be one of the major importers of commodity chemicals. Furthermore, international chemical companies have advanced and more sophisticated products that can support the further stages of China’s economic development. However, international companies in China’s chemical sector have new challenges coming their way. Companies in China are increasingly moving out of low-profit commodity segments towards more sophisticated sectors. They are also enjoying several home-player advantages in the highly competitive market. In this article, chemical industry experts at Infiniti Research provide an outline of the moves that international chemical companies must make in order to continue capturing profitable growth opportunities in China’s chemical market. International chemical companies that want to create a place for themselves in China’s chemical market must align their products and business models with China’s evolving needs, learn how to access the shifting demand, and strategize to expand and strengthen their base in this market.

Irrespective of the industry, entering a new market is highly challenging with several unforeseen risks that could prevent the company from sustaining in that market. Request a free proposal to know how you can partner with us to leverage our market entry solutions and bolster your business growth in a foreign market.

Chemical companies

 Adapt to the market’s changing needs

There will be a continued demand growth for chemicals in China. But the areas of opportunity in the country’s chemical market appear to be increasingly nuanced, due to which chemical companies must take measures to adapt and align their strategies accordingly. One approach to achieve this is by focusing on the company’s products that match up with China’s chemical industry needs and what the Chinese state is promoting. The chemical industry is a catalyst to promote growth in various strategic industries such as electric vehicles, new energy technologies, and civil aviation that the Chinese government wants to nurture growth globally. As such, this opens new windows of opportunity for international chemical companies to become China’s trusted partners in native innovations in industries that have government backing. International chemical companies can also work closely with government bodies in China to form product specifications based on the changing standards or rules in the region. This could prove to be a new growth driver for chemical companies.

Want to know more about the future of chemical manufacturing and the key factors that could alter the way chemical companies do business in the future? Request for more information from a chemical industry expert.

Manage stakeholders proactively

Chemical companies that want to sustain and grow their business in China’s chemical market must work and maintain positive relations with several stakeholders. This includes stakeholders across the country’s business and regulatory landscape. New plant launches and product approvals especially in regulated product categories require comprehensive rounds of approval from government authorities as well as state-run research institutions. Therefore, it is vital for international chemical companies to ensure proactive stakeholder management. Successful chemical companies are even going to the extent of hiring government-affairs teams to identify the key stakeholders in all areas that are related to their business operations in China. These teams understand stakeholder concerns and work on ways to address them in time so that hinderances to the company’s project can be avoided.

Choosing the right distribution partners

Businesses in China are generally heavily relationship-driven. As a result, it is vital for international chemical companies to have a local presence especially in new markets and business verticals. To gain a better foothold in China, chemical companies must focus on building a distribution partner network through which they can get to customers with ease and provide unique offerings in the highly competitive marketplace. Having the right distribution partners are critical as relationships, dependability and ethics vary sharply among different players in the market.

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How can Chemical Engineering Save the World from Climate Change?

The climate change phenomenon has been lingering around for a long time. Specific human activities have contributed to the increasing concerns of climate change, which is often referred to as global warming. The release of greenhouse gases has caused the average global temperature to rise by about 1°C since 1880. It may not seem a lot, but it has caused the Antarctic ice sheets to melt, and raise the sea level by about 12 inches in the last 50 years. The citizens of today need to be more cautious with greenhouse emissions and chemical wastages to control global 123warming. So how can chemical engineering contribute to the environment and save the world from climate change?

Energy efficiency

One of the easiest way to control emissions is to do more with the same amount of input. A majority of the energy produced today is wasted in the form of heat, water, or other emissions. The chemical sector being the most energy-intensive needs to take initiatives to improve energy efficiency. Chemical engineering can figure out ways to improve the overall efficiency within the chemical industry.

Renewable energy

The chemical industry currently has a large carbon footprint, which is negatively impacting climate change. A straightforward way to reduce such carbon footprint is the use of renewable energy in the form of solar, wind, and water. However, the problems with such renewables is the matter of cost-efficiency as such technologies have an enormous upfront cost. Chemical engineering can solve such problems of cost efficiency by working on ways to produce low-cost renewable energy sources. For instance, using spray-on solar cells can improve its ability to capture and retain more energy than usual.

Nuclear energy

Nuclear energy is also considered to be a renewable source of energy and has been contributing towards decarbonizing the global energy economy. Its ability to provide power on a continuous basis without emitting greenhouse gases is proving vital in controlling climate change. Chemical engineering plays a vital role to ensure smooth operation of a nuclear power plant as they ensure efficient plant design, standards of safety, and higher environmental performance.

Energy storage and grid management

There’s a lot of factors to consider in the process of efficient power distribution. The process starts right from energy generation and extends till storage and distribution. In case of solar and wind energy, peak performance occurs at certain times, and such energy should be stored in batteries. Improving the efficiency of such batteries can translate to improved power management. The chemical engineering sector is making progress in the development of efficient batteries, which waste less energy during conversion and has higher storage capacity.

Sustainable food

Although it looks innocent, the food and agriculture sector is one of the largest contributors towards greenhouse gas emissions. The emissions come from livestock such as cows, rice production, and agricultural soil. Livestock accounts for the majority of the emissions, with the release of methane and nitrous oxide in the atmosphere. Chemical engineering can come to the rescue by designing fertilizer in a low-energy way, reusing food waste, and making food production more efficient.

Sustainable bioenergy

As the world gets depleted of their fossil fuel reserves, scientists start looking for alternatives, of which biotechnology seems very promising. However, certain challenges need to be overcome to produce energy from food crops like maize and sugarcane. To save the world from climate change, we need to turn towards chemical engineers to develop efficient technologies and make bioenergy production cost effective.

For more information on how chemical engineering can save the world from climate change, chemical engineers, and greenhouse gas emissions:

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Related posts

12 Principles of Green Chemistry Explained

Chemicals are usually looked upon with an evil eye in the modern world. People are worried about environmental safety and health issues that are brought about by harmful chemicals. In addition to that, chemical companies themselves are struggling when it comes to the safe disposal of toxic substances and leakages. It comes as no surprise that people all over the world prefer organic goods in a bid to avoid such harmful chemicals. However, the truth is that chemicals are omnipresent, and cannot be avoided, as it essential in the manufacturing of infrastructure, electronic devices, household items, and even the food we consume. As a result, the concept of green chemistry has emerged to soften the impact of harmful chemicals on the environment and human health. Green chemistry or sustainable chemistry focuses on designing products and processes that minimize the generation or use of hazardous substances. It is different from environmental chemistry as it focuses more on technology to prevent pollution and reduce the consumption of non-renewable resources.

Principles of Green Chemistry

12 Principles of Green Chemistry


The saying “prevention is better than cure” is true not only in the healthcare industry but also the chemical industry. It is essential in green chemistry to design processes that reduce wastages as it is better to prevent it in the first place than to treat or clean up the waste after its creation.

Atom economy

All chemicals in green chemistry are a result of reactions at an atomic level. So by figuring out the atoms that are incorporated into the final product and the atoms that are wasted, the efficiency of the reaction can be increased. Manufacturers need to measure the atom economy percentage, which can be calculated by analyzing the formula weight of the atom utilized and all other reactants.

Atom economy = (FW of atoms utilized/FW of all reactants) X 100

To drive profits, organizations need to head forward and embrace new techniques and processes to unlock their hidden potential. Do you agree?

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Less hazardous chemical syntheses

This principle outlines that wherever applicable, synthetic methods should be used since they possesses little or no toxins that affect the environment or human health. The chemical industry may face difficulty in implementing this green chemistry principle as chemists usually work with highly toxic substances that have no substitute. However, it can be practiced by paying attention to the materials used for bring about chemical transformation.

Designing safer chemicals

Players in the greeb chemistry chemical industry should strive to reduce the toxicity of their final product without compromising on their functional efficacy. The green chemistry chemical industry often prefers highly reactive chemicals as they affect molecular transformation. However, it may also react with unintended elements in the environment or humans.

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Safer solvents and auxiliaries

Avoiding the use of auxiliary substances like solvents and separation agents whenever possible is one of the most important principles of green chemistry. Although reactions may not proceed without the use of solvents or mass separation agents, players in the green chemistry chemical industry can opt to use safer auxiliaries.

Design for energy efficiency

Chemical companies should design their products to consume less energy to decrease the overall environmental and economic impact. Green chemistry can be achieved by using synthetic methods at ambient temperature and pressure. Improving the green chemistry energy efficiency in the chemical manufacturing process will reduce the dependency on fossil fuels.

Use of renewable feedstocks

Although the concept of producing fuels and chemicals from feedstocks that never deplete seems impracticable, it is not entirely impossible. This green chemistry principle can become a reality due to developments in biotechnology, physics, agronomy, toxicology, and engineering. As a result, in green chemistry it allows chemical companies to use a renewable raw material or feedstock.

Reduce derivatives

To abide by the principles of green chemistry, chemical companies should avoid or reduce the use of unnecessary derivatives including blocking group, protection, and temporary modification of chemical or physical properties. Using such derivatives will require additional reagents further in the manufacturing process and generate additional waste.

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Marketing Strategy

Why a Robust Marketing Strategy is Essential to Sustain Yourself in the Chemical Industry

Marketers often come up with hundreds of marketing ideas for FMCG or any consumer-facing brands. The same managers will often struggle to bring about many such ideas when it comes to B2B marketing. Such limitations are caused by the finite number of channels available for promotions and advertisements. Marketing gets even tougher when it comes to the chemical industry due to stringent regulations, product diversity, and globalization.

However, marketing strategy is essential for chemical companies for their survival and global expansion. Product differentiation can be hard to achieve as all chemicals are usually made up of same components, and their content is usually mentioned in the packaging itself. Consequently, players in the chemical industry have to look at a innovative marketing strategy to compete in the regional as well as global market.

Strong branding

Branding is a critical part of the marketing strategy for not only consumer goods, but also in B2B communication. Although consumer brands spend millions of dollar in developing brand awareness, marketing industrial products doesn’t need the same kind of commitment.

Customers in the chemical industry are ready to switch brands if they get the chemically equivalent product. Chemical companies need to fight hard to create a unique brand-name in the market. Delivering quality product consistently and providing support and consultancy can help build a reputable brand name. As a result, branding is highly dependent on pricing and performance of the supplier. This is the reason why buyers aren’t hesitant to purchase from established brands such as BASF SE, DuPont, and Dow Chemicals.

Direct Sales

Since chemicals are a complex commodity, there’s a lot of information that needs to be conveyed to a prospective customer before finalizing a sale. Mass marketing mediums don’t work well as it can only communicate a limited amount of information.

Consequently, a strong sales team is required to persuade the client to purchase by presenting company’s superior product portfolio. It is essential that all members of the sales team are on the same page with each one of them trying to promote the same key product delivering similar messages. The role of a salesperson is more consultative in nature as they try to suggest the right product that will fit customers needs. Additionally, providing samples and demonstration can increase the possibility of sales.

Offering multiple service levels

Although most chemical components will have similar pricing across all suppliers, the price varies because of additional service provided by the supplier. In a bid to exhibit pricing competitiveness, chemical companies can offer multiple service levels at different price points rather than bundling the same service across all products. For instance, companies can include only essential services with their standard products and use automation to lower costs.

Online presence

There’s a saying that’s gaining prominence in the world of digital marketing which goes, “Your business does not exist if it’s not there on search.” Today, a vast majority of new players and companies who are looking to expand rely on Google and other search engines to identify capable suppliers. They do their groundwork in terms of product offering, pricing, and other services. Thereby, becomes essential for chemical companies to have a functional website with a good search ranking and all the relevant information which are required by the customer.

They can also bolster their online presence using search engine marketing (SEM) and native and display advertisements. A mix of traditional and online marketing often delivers impressive results. Additionally, social media can also be leveraged to generate brand awareness. Recently, many companies have utilized YouTube videos to share their B2B success stories and convey their product capabilities.

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Market Intelligence

The Effect of Global Trends on Chemical Companies

The global economic situation for the chemical industry is highly unpredictable and volatile. The top management of companies need to keep a close watch on the global trends that would directly or indirectly impact their business. It is also essential to stay up-to-date with the changing trends to get a bigger picture of the market conditions and even to know what exactly your competitors are up to. Curious to know what are the trends that have been keeping chemical companies on their toes in order to make quick alterations in operation and gain the early bird advantage in the market?IR_Brochure

The era of digitization

The Internet and mobile phones have taken over the world. The increasing access and exposure to technology have made customers more demanding. Today, the customers want more intimacy and transparency with the company. Even the B2B customers have started demanding detail order receipts and the ability to track shipments in real-time. Vendors and customers are more likely to lose their trust in companies that are technologically obsolete. Therefore it has become the need of the hour for chemical companies to update themselves.

Regulatory Changes

The regulations governing everything from material handling, labeling, manufacturing, storage, and shipping of products keep changing from time to time. The rules and  regulations in the chemical industry vary from region to region or from country to country. Therefore, chemical companies operating in different regions, especially across borders must be well aware of the existing regulations and alter their operations accordingly to prevent regulatory and legal interventions.

Distribution Channel Changes

Chemical companies are widely adopting trends like mass customization. Such trends are expected to impact the manufacturing and supply chain of chemical substances. Companies are likely to take advantage of mass communication by shipping directly to customers rather than selling to a few manufacturers that create their own products and manage distribution. With chemical companies becoming more accessible to customers, more number of customers might place smaller orders making it essential for players in the industry to have a strong supply chain.

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Watch Out for These Chemical Industry Trends in The Upcoming Year

Technological disruptions in the chemical industry can give rise to both challenges and opportunities. But thanks to technology, the speed of manufacture and processing of substances in the industry has skyrocketed in the past couple of years. In order to benefit from the growth, chemical manufacturers should be ready to incorporate a new mindset and a strategic shift from the current operations. For long the profitability in the chemical industry has swung like a pendulum from good to bad times. However, with digitization and technological advancements, it is expected that chemical manufacturers will be able to gain better profitability, smarter portfolio management, and value capture.     

Chemical Industry Trends

Re-modelling business

The rapidly changing market conditions call for players in the chemical industry to re-invent their traditional practices and do away with obsolete business models. For this, chemical industry companies must identify and keep a close watch on their competitors in the market. Companies in this industry also need to reconsider their market offering based on the existing demand and profitability in a particular market. This will help them to cut down on losses in the long run.

Focus on emerging markets

Until now, only a few top players in the chemical industry were dominating a more significant part of the market share. But gradually there is a visible trend of more number of players entering this market. Therefore, it has become essential for chemical manufacturers to cater to specific needs of customers in different emerging markets to withstand the cut-throat competition.

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Internet of Things(IoT)

Some of the big players in the chemical industry were quick to adopt IoT into their business, but many smaller players in the industry are still not aware of it. How is IoT beneficial in the industry? This technology enables connectivity between equipment and smart devices, allowing manufacturers to track performance gaps in real-time. Given the rate of rising competition, it is high time that chemical manufacturers switch to such smart business to optimize their production systems.


Though technology is a boon to the industry, it also has several drawbacks like making the company vulnerable to threats from trespassers. Therefore, chemical manufacturers need to provide training and guidance to their technical experts and plant operators about the emerging risks and measures to overcome them.


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