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A top BASF China executive is leading the race to succeed Martin Brudermüller as chief executive of the world’s biggest chemicals group, an appointment that would cement the company’s reliance on Beijing at a time of rising geopolitical tensions.
Markus Kamieth, the board member overseeing BASF’s operations in China, is backed by Brudermüller, who is to step down in May to join Mercedes-Benz, two people familiar with the matter said. He is the clear favourite after Saori Dubourg, who headed BASF’s European business, suddenly left the company in February. Dubourg had advocated a more cautious approach to China, the people said.
Kamieth has been closely associated with Brudermüller’s decision to build a €10bn petrochemicals site in Zhanjiang, in the Guangdong province. The plant — the largest investment in the group’s 158-year history — is modelled on BASF’s sprawling headquarters in Ludwigshafen, about an hour’s drive south of Frankfurt, where it employs nearly 40,000 people.
The investment, announced in 2018, has coincided with intensifying tensions between China and the west over the fate of Taiwan. Berlin has grown concerned about the reliance on China of some of its largest industrial groups, including Volkswagen and Infineon.
Unveiling Germany’s first comprehensive stance towards China last week, foreign minister Annalena Baerbock warned companies investing heavily in China that they would “have to bear more of the financial risk themselves”.
Proponents of the Zhanjiang plant, which makes BASF one of the largest foreign investors in China, say it is a reflection of the company’s confidence in the world’s second-largest economy. Some BASF executives have even privately said that the company was underinvested in China, which accounts for more than 43 per cent of the global chemicals market, but less than 14 per cent of the group’s 2022 revenues.
“The view of the company is that China is still where growth in the chemical industry is, even if the market is growing slower than expected and even if there are geopolitical risks,” said Sebastian Bray, analyst at Berenberg.
Some insiders worry the investment is increasingly running counter to EU and US calls for western companies to “de-risk” their operations in the country. Dubourg’s departure has prompted calls for BASF’s supervisory board to broaden the CEO search externally, according to three people familiar with the internal discussions. These calls had, however, been rejected by board chair Kurt Bock, two of the people said.
BASF declined to comment, saying that the appointment of its top managers was the responsibility of its supervisory board.
Brudermüller has been critical of the regulatory landscape and high energy prices in the EU. Alongside the €10bn investment in Zhanjiang, BASF has announced “permanent” downsizing in Ludwigshafen.
The company’s next chief executive will have to manage a tough economic environment both in Europe and China. BASF last week slashed its earnings targets after revenues and profits shrank due to slowing demand for consumer goods.
BASF had struggled to find a new growth strategy since China started exporting chemicals and emerged as a rival about a decade ago, Bray said.
China’s economic slowdown is also contributing to a downbeat outlook in the chemical industry. “The key question is: if China is not a big growth story from an industrial perspective in the next five to 10 years, then what does BASF do? There’s not yet a clear answer to that question,” Bray said.
Additional reporting by Yuan Yang in London
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