Under the new pattern, where are the new opportunities for the chemical industry

In the key points of the "14th Five-Year Plan" announced not long ago, in addition to the traditional goals of achieving high-quality economic development, optimizing the economic structure, and enhancing innovation capabilities, "accelerate the construction of a domestic and international dual cycle that promotes each other. The "New Development Pattern" was entered into the outline for the first time, and it quickly triggered heated discussions from all walks of life and the market. Under the new dual-cycle pattern, the chemical industry will usher in new opportunities, and the development of the industry will present two new trends.

Improve industrial chain clusters in a dual-cycle pattern

As we all know, downstream terminal demand is an important force to promote the innovation of the upstream industry chain. With the rapid deployment of a number of short-term and long-term economic stimulus plans in China, downstream terminals have generated a considerable amount of innovative demand, which has also promoted the upgrading and improvement of the industrial chain. The complete industrial chain not only drives the internal circulation, but also fills up some of the gaps in the external circulation. Therefore, many experts said that compared with the original economic system that basically relied on exports, the two-wheel drive led by investment and consumption would be healthier and longer-lasting.

Of course, although the new development pattern is dominated by the domestic cycle, it does not hold a closed attitude, but rather exerts the leading role of the domestic cycle on the international cycle. The two are complementary and inseparable. Wang Yiming, deputy director of the Development Research Center of the State Council,’s interpretation of the dual cycle also confirms this point. He believes: "Even if we want to expand domestic demand, we cannot do without the coordination of the international industrial chain and supply chain, especially our industrial technological progress. It is also inseparable from participating in international cooperation and competition."

Take the propylene oxide production process in the chemical industry as an example. Propylene oxide is the main raw material for the production of polyurethane foam, and its applications are widely used in auto parts, home decoration, insulation and other fields. However, the traditional production process not only has a high investment cost, but also causes a great burden on the environment; the data shows that The production of 10 tons of propylene oxide will simultaneously produce 500 tons of waste residue and a large amount of waste water. While the HPPO process of the multinational chemical giant Evonik effectively increases profit margins, it completely bids farewell to waste residues and hazardous by-products. It is reported that last year, Evonik signed an HPPO process license and technical service agreement with Qixiang Tengda, a domestic company, to actively contribute to the sustainable development of China's green manufacturing.

Similarly, in some industries that China has long dominated the world, the demand for industrial technology upgrades has quickly become the focus of the new development pattern. One thing worth mentioning is the artificial leather industry. It is understood that China has contracted about 90% of the world's artificial leather manufacturing. Although it is better than genuine leather production in terms of environmental protection, the traditional artificial leather production process still has no small harmful effects on the environment. For this reason, "water-based artificial leather", which replaces organic solvents with water, is rapidly emerging as a green and sustainable alternative. Among them, various chemical additives from Evonik are used in artificial leather production to effectively alleviate the environmental impact in the process. To support China’s environmental protection initiatives with practical actions.

In the health care field that has received much attention, especially precision medicine driven by emerging technologies, advanced materials and technologies from the international industry chain are also highly involved in and help the upgrading of China's health care industry. For example, the Chinese medical implant market has now occupied the second place in the world, and is becoming a hot air outlet with an annual growth rate of 10% to 15%. Specialty chemical company Evonik pioneered the use of high-performance polymer polyetheretherketone (PEEK) for medical implants, and used technology to achieve “tailor-made” implantable medical devices for patients, thereby improving The accuracy of medical equipment such as bone trauma, cardiovascular stents, and dental restorations promotes healing while reducing pain. In addition, as optimistic about the development prospects of this industry, Evonik also invested in a Chinese 3D printing medical implant startup last year.

"International market connectivity is an objective requirement for economic development. China has a vast market demand, while foreign countries are equipped with corresponding technical reserves. The combination of the two can improve the industrial chain cluster to the greatest extent." President of Evonik Greater China Xia Fuliang said, “In recent years, China has expanded its opening up, improved its business environment, and lowered market entry barriers. These measures have not only facilitated the mutual promotion of the domestic and international dual cycles, but also strengthened the determination of multinational companies to develop in China. Driven by new infrastructure, the need for industrial transformation and upgrading is obvious. From product development to business model innovation, it is a rare new development opportunity for us."

Under the new development pattern, two major trends in the future of the chemical industry

In fact, at the beginning of the “dual cycle” new development pattern, some experts analyzed that the core is not simply to expand or stimulate domestic demand, but to improve the innovation and competitiveness of the supply side. As a pillar industry of the national economy, the chemical industry at the front end of the industrial chain will surely play a pivotal role. As far as the chemical industry is concerned, although it has maintained a relatively high growth rate in recent years, the industrial structure is still in the stage of "big but not strong" and needs to be further improved. And as the "domestic cycle" and "domestic and international dual cycle" are entered into the next five-year outline, the innovative development of the chemical industry will mainly show the following two major directions.

First, follow the general trend of sustainable development and promote industrial innovation. Although the chemical industry is very important in the entire industrial system, it still has not gotten rid of the label of "pollution" in the private sector. In addition to ensuring green and environmental protection in downstream production, we need to find new directions at the source. At present, the entire new chemical material system is built on non-renewable energy sources such as oil and natural gas, but petrochemical resources are scarce, and excessive use will have irreversible harmful effects on the environment and climate. In order to alleviate environmental pressure, the European Union has proposed to replace petrochemical-based materials with bio-based products, and the United States requires that 50% of chemical raw materials must be derived from bio-based by 2050.

At this point, Evonik is already at the forefront of the industry. In May of this year, it signed a joint research agreement with Beiersdorf to use carbon dioxide as the starting material to produce high-value sustainable raw materials that can be used for personal care products through artificial photosynthesis, thereby helping to achieve the closed loop of the carbon cycle. It is also a green application of carbon dioxide. Evonik has also established a pilot plant with Siemens earlier to convert carbon dioxide into raw materials that can be used for chemical production through fermentation and electrolysis. The technological revolution is actively empowering the raw material challenges of the chemical industry.

Second, accelerate technological iteration driven by digital innovation. At present, the industrialization of digital technology and the digitization of traditional industries have become the consensus of various industries and industries. In addition to accelerating the progress of industrial cross-industry integration, digital transformation can also simultaneously drive the rise of new business formats and new models.

Among them, the C2M model, that is, reverse customized products from the consumer end to the production end, is a typical representative. Take the personal care industry as an example. With the improvement of information transparency, consumers no longer blindly pursue brands, but turn their attention to the ingredients and effects of skin care products. While the mainstream consumption concept is changing, flexible response to market demand has also created a new space for the industry. In this way, how to efficiently link demand and high-quality supply has become a common issue in the industry chain.

In order to effectively solve this problem, Evonik, an established supplier of personal care ingredients, has reached a strategic cooperation with Alibaba to jointly promote the C2M model to help the rise of domestic skin care brands. 1688 industrial brands stand in the C2M plan to share the latest consumer insights, and raw material suppliers and manufacturers can quickly connect through the Ali platform, shorten the product development cycle, and truly achieve a win-win situation for raw materials, brands, and consumers.

"How to participate in the general trend of social development with a forward-looking strategic vision and help the industry and industrial chain innovation and upgrading is a problem that enterprises need to think about." Xia Fuliang said, "Starting from the overall trend of the market for specialty chemicals, Evonik defines Four strategic growth engines, namely special additives, animal nutrition, medical care and care, and smart materials. These forward-looking strategic layouts also enable Evonik to quickly respond to new markets such as recovery from the epidemic, new infrastructure, and dual circulation. To meet the growing demand of the Chinese market."

When the new economic development pattern of the next five-year plan is born, the dual cycle will lay the foundation for the comprehensive reshaping of production relations and the release of digital productivity, and will provide a strong driving force for the current recovery of China's economy and its sustainable development in the future. As one of the pillar industries of the national economy, the chemical industry is actively empowering the transformation and upgrading of the industrial chain with technological innovation and cross-border integration, from product research and development to business model reform, and helping to build a green, healthy, environmentally friendly and sustainable future world.