Post on 10-Mar-2018
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Framework conditions for innovation: The business perspectiveChina and R&D Globalisation: Integration and Mutual Benefits
Beijing, 28 August 2007
J. WuttkeBASF China
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1 | BASF in Asia Pacific
2 | Why innovation in Asia Pacific?
3 | BASF innovation in Asia Pacific
4 | Challenges
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BASF in Greater China
29 wholly-owned companies
9 joint-ventures
14 production sites
More than 5,000 employees
2006 3.8bn Euro revenue
Major investments
Verbund site in Nanjing
Polyurethanes complex in Caojing, Shanghai
BASF Sales Office
BASF Production Company
Nanjing
Beijing
BASF in Greater China
Shanghai
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1 | BASF in Asia Pacific
2 | Why innovation in Asia Pacific?
3 | BASF innovation in Asia Pacific
4 | Challenges
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A typical Euro centric Statement
“Let China sleep, for when she wakes, she will shake the world.”
Napoleon Bonaparte, ca. 1800
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3317 9 5 5 12 20 25
2216
127
35
811
3
87
66
2
919 27 22
2120
181517
26 26 19 1814
1110
20 4
2
4
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1
01020
30405060
7080
1700 1820 1870 1913 1950 1973 2001 2015 2025
China Indien Japan USA Big 4 EuropeanSource: Angus Maddison
% of World GDP
at purchasing power parity
Comeback of China and India:GDP as a share of world GDP 1700 - 2025
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China‘s growth model will shift towards own innovation & new technologies
Workshop of the world
New technologies
„Copy-novation“
Innovation
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Consumer of chemicals
shifting to Asia
Origin of innovation and technologiesshifting to Asia
We innovate in Asia Pacific to leverage customer and technology dynamics
We need to innovate where our customers & latest
technologies are
Better understanding of customer needs
Faster reaction on customer needs
Wider access to latest technologies
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1 | BASF in Asia Pacific
2 | Why innovation in Asia Pacific?
3 | BASF innovation in Asia Pacific
4 | Challenges
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Prerequisites for successful university cooperation
Excellence, People, Trust, Mutual respectExcellence, People, Trust, Mutual respect
WinWin--Win SituationWin Situation
Scientific communityScientific community IndustryIndustry
Scientific Scientific ReputationReputation
Fast publication
Reputation and respect
Financing
Competitive advantageCompetitive advantage
IP-protection
Exclusivity
Economic value
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BASF´s cooperation model with ISIS
Scientific Excellence (Prof. Lehn)
IP protection100% BASF
cost efficient
flexible
R&D team at ISIS is integrated in
BASF
IInstitut de SScience et d‘IIngénierie SSupramoléculaires
http://www-isis.u-strasbg.fr/BASF/
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BASF R&D in SingaporeR&D for growth cluster nanotechnology
Competence center for nanostructured surfaces
Objectives• Create center of excellence
for surface science and nanotechnology
• Participate in excellent scientific infrastructure of academia (A*STAR institutes) and industry
• Strengthen research network in Asia
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Leverage all our innovationopportunities in Asia Pacific!
Global R&D Center
Basic research, cooperations with universitiesFocus on new technologies
Locations: Thane (India), Singapore
With three types of innovation centers in Asia, we cover local customer needs and participate in latest technologies
Regional R&D Center
Product developmentand formulationsFocus on regional market needs
Locations: Kuanyin, Shanghai,Yokkaichi Pasir Gudang, ...
Local Technical Center
Local product abaptationFocus on technical customer support
Locations: Nansha, Chigasaki, Sydney, Singapore, Bangpoo, ...
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Market Requirement: Adhesion of marine organisms leads to increased fuel consumption of ships by ca. 40%. Reduce fuel consumption by applying an eco-friendly solution
Solution through chemistry: Minimize adhesion of marine organisms by making the surfaces more repellent via biocide-free, eco-friendly nanocoating
BASF input: Fundamental research with BASF teaming up with 30 partners in a trans-national research collaboration Ship hull and propeller
covered with organisms
Nanotech solutions from new research lab in Singapore
Lotus effect in nature
How to prevent marine organisms building up on ship hulls?
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BASF innovation hub Shanghai area:Successful innovations for Asia Pacific
Technical R&D Center
Opened July 2005
>100 R&D employees
Main activities:- Dispersions (formulations,
paper, adhesives, coating)- Polymer materials (paper,
textile, leather, admixtures, construction, formulations)
- Pigments, dyes, stabilizers
Polyurethane TDRC
Opened June 2007
>30 R&D employees
Main activities:- Slab foams- TPU development- Automotive, CASE
rigit construction and appliances
Automotive Center
Opened 2007
> 20 R&D employees
Main activities- Technical Center for
engineering plastics- R&D for catalysts- Formulation development
for fine chemicals
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Is there the specific Chinese touch?
Market Requirement: Communication about hand feel can only be physical, thus we need to be literally close to the customer to develop the touch the industry wants.
Solution through chemistry: Unique combination of different chemistries to achieve a wet, soft, buttery touch and improved physical properties of leathers for garment, upholstery and shoe upper.
BASF input: Local development in a cooperation of selected customers, leather technicians and development chemists
Innovative handle modifiers from new technical R&D center in Shanghai
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1 | BASF in Asia Pacific
2 | Why innovation in Asia Pacific?
3 | BASF innovation in Asia Pacific
4 | Challenges
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Is China a technology threat? No
• China isn’t innovative enough today• Why innovation is important for China• Once inventive, but not innovative?• Why isn’t China innovative today?• How to become innovative?
Slide Source: CLSA 2006
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Not really ‘Made in China’
• 88% of tech exports from MNCs 2005
Up from 80% in 2003
• Only 4 of these top 25 exporters are local firms
• MNCs value-added in China overall is still too low
Source: CLSA 2006
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Policy challenges
• Coherent policy e.g controversial Patent Law• What is ‘Indigenous’ R&D?• Financing structure, lack of venture capital• IPR: enforcement problem, low penalty clauses• Forced technology transfer / local content requirement = wrong signal• Competition Policy e.g. Anti Monopoly Law and M&A regulations• Standards, why not int. standards• Mismatch: Skills university graduates vs. knowledge organisations• How to get state funding into SME’s• Public Procurement could promote innovation, GPA problem
Slide Source: CLSA 2006
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System challenges
• How to handle the conflict between • innovativeness — which is strongly determined by creativity, critical
thinking, and the willingness to take risks and to accept failures—and
• a political system and educational and organizational culture that discourage dissension and individualism.
Source: NBR, Sylvia Schwaag Serger & Magnus Breidne
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Innovation requirements in China
– Innovating in China is similar to innovating elsewhere in the world – It requires listening to customers, excellence in project management,
managing risks, providing leadership, etc.
But it requires a little bit more:– Most local organisations are not wired for innovation– There is a lack of market information or contacts with lead markets– There is dearth of resources in particular risk capital or creative design– There is a lack of understanding for intangibles e.g. IP or brands– Markets and Customers are hardly mentioned in R&D plan
Source: Cambridge University Arnoud De Meyer
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Rewiring the organisation
1. Innovation needs a focus on value creation2. Shift from creative improvisation to careful
process management3. See the firm as a bundle of competencies, not
as a portfolio of products4. Stimulate creativity: a difficult task in family
dominated organisations5. Get Marketing better: Build up antennae in
sophisticated markets
Source: Cambridge University Arnoud De Meyer
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Clever Management
1. Yes an appropriate and enforced IP protection framework is important
2. But you cannot wait till that is sorted out:» Learn from the imitators» Defend yourself with speed, back office
protection, brands, captive resources, etc.
Source: Cambridge University Arnoud De Meyer
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Consumer of chemicals
shifting to Asia
Origin of innovation and technologiesshifting to Asia
We need the best R&D talents from the region to successfully innovate in Asia
We need to innovate where our customers & latest technologies are
Better understanding of customers
Faster reaction on customer needs
Wider access to latest technologies
We are looking for the best R&D talents to innovate with us in Asia Pacific!