The birth of a chemical leviathan — Sinochem and ChemChina merge

China’s two biggest chemical manufacturers, both state-owned, are formalizing a merger, more than three years after it was first reported. Níng Gāoníng 宁高宁, the chairman of Sinochem Group — which has now absorbed ChemChina — confirmed the consolidation of the two companies at a government press conference in Beijing yesterday.

• “Both companies are going forward with the merger… It’s highly necessary to collaborate on upstream and downstream technology and in markets at home and abroad,” said Ning, according to the Nikkei Asian Review.

The two companies combined have annual sales of about $146 billion from an enormous range of chemicals. Nikkei says the global industry needs to brace “for a major disruption, as the combined sales of the companies dwarfs that of prospective runner-up BASF, the German competitor that took in $70.7 billion.”

• This was the public confirmation from Ning of the consolidation, says Nikkei, although in 2017, Reuters reported that the two companies would merge, and in January this year, the two companies combined their agricultural assets.
• Ning was already chairman of ChemChina: He took over when the company’s former chairman Rén Jiànxīn 任建新 retired in 2018.
• ChemChina came to global attention in 2016, when it successfully bid $43 billion to acquire Swiss seed and pesticide group Syngenta. ChemChina also owns around 45% of iconic Italian tire company Pirelli.

The U.S. Department of Defense added Sinochem to its list of “Communist Chinese military companies” operating directly or indirectly in the United States.  

• Ning reacted to the move by saying it has shaken his faith in free trade: He had “taken it for granted that technology imports, exports, and outbound investment were positive,” says the South China Morning Post. “‘But now all these thoughts have changed.’”

What’s next for the leviathan?

The Sinochem-ChemChina conglomerate is enormous, and very powerful in nearly every market and sector of the chemicals industry around the globe. The company is bound to face further scrutiny all over the world in the years to come.

But in the meantime, watch out, DowDuPont, be careful, BASF!