BEIJING - Lanxess AG, the world's biggest producer of synthetic rubber, said on Friday that curbs on the use of vehicles in Chinese cities will not harm its business in the country, despite a gearing down of the growth rate in the country's car sales.
Government restrictions on car purchases and use are expected to slow the growth rate of the domestic auto market by between 10 and 15 percent from the current figure of 30 percent. However, Lanxess is still confident about its business, as the demand for premium car components is still growing, said Martin Kraemer, CEO of Lanxess Greater China, in Beijing on Friday.
Sales of passenger cars in China dropped by 10.3 percent in January from a month earlier to 965,238 as cities started to limit vehicle use and purchases to relieve traffic congestion.
The number of cars for every 1,000 people in China is still far below the level in industrialized countries, said Kraemer. Moreover, sophisticated products, which can boost fuel efficiency and improve tire and vehicle safety, will have ample scope for growth.
"Our engineering-plastics and rubbers units will benefit from the increasing domestic need for high-quality products, especially in the coastal areas. We're optimistic that our business will continue to grow in the country," Kraemer said.
Buoyed by China's booming auto market, Lanxess saw its sales revenues in the mainland, Hong Kong, Macao and Taiwan jump by 37.1 percent in 2010 from the previous year to reach more than 800 million euros ($1.1 billion).
China is a major growth engine for Lanxess, making up 11 percent of the group's total in terms of revenue, the company said.
"Last year was an excellent one for Lanxess, especially in China. Our ability to achieve record sales in this growing country is indicative of our premium portfolio, expanded production facilities and effective pricing strategy," Kraemer said.
The company's sales came mainly from its rubber business that supplies products to the tire and automobile industries, which have largely benefited from China's megatrend (a large-scale change in circumstances or fashion) mobility.
"Mobility and urbanization is the biggest megatrend in China, and we're well-positioned to support it," Kraemer said.
Lanxess, which was spun off from the Bayer Group in 2005, has invested an amount in the range of "three-digit million US dollars" in China, said Kraemer.
More investment will go into the market, including acquisition possibilities, he added, without elaborating.
The company invested $40 million in the city of Changzhou in eastern Jiangsu province last year to set up a leather chemicals facility, which is expected to be operational by 2013.
