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A senior BASF China chief executive is leading the race to succeed Martin Brudermueller as CEO of the world’s largest chemical group, an appointment that will cement the company’s dependence on Beijing at a time of heightened geopolitical tensions.
Brudermüller, who will step down in May to join Mercedes-Benz, is backed by Brudermüller, a board member who oversees BASF’s operations in China, two people familiar with the matter said. He is the frontrunner after Saure Dubourg, who headed BASF’s European business, abruptly left the company in February. People said Dubourg had advocated a more cautious approach to China.
Kameth was closely associated with Brüdermueller’s decision to build a €10 billion petrochemical site in Zhanjiang, in Guangdong province. The plant — the largest investment in the group’s 158-year history — is modeled 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, coincided with rising tensions between China and the West over the fate of Taiwan. Berlin has grown increasingly concerned about the dependence of some of its largest industrial groups on China, including Volkswagen and Infineon.
Foreign Minister Annalina Baerbock unveiled Germany’s first comprehensive stance on China last week, warning companies that invest heavily in China that they will “have to take on more financial risks themselves.”
Supporters of the Zhanjiang factory, 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 even said privately that the company is not invested in China, which accounts for more than 43 percent of the global chemicals market, but less than 14 percent of the group’s 2022 revenue.
“The company’s view is that China remains where the growth is in the chemical industry, even if the market is growing more slowly than expected and even if there are geopolitical risks,” said Sebastien Bray, an analyst at Berenberg.
Some insiders worry that the investment is increasingly at odds with calls from the European Union and the United States for Western companies to “de-risk” their operations in the country. Dubourg’s departure has prompted calls for BASF’s supervisory board to broaden its search for the CEO externally, according to three people familiar with the internal discussions. Two people said that these calls were turned down by Chairman Kurt Bock.
BASF declined to comment, saying that the appointment of its senior managers is the responsibility of its supervisory board.
Brüdermueller criticized the regulatory landscape and high energy prices in the European Union. Along with the €10 billion investment in Zhanjiang, BASF announced a “permanent” downsizing in Ludwigshafen.
The company’s next CEO will have to manage a difficult economic environment in both Europe and China. BASF last week cut its earnings targets after revenue and profits shrank due to slowing consumer demand.
Bray said BASF has struggled to find a new growth strategy since China began exporting chemicals and emerged as a competitor about a decade ago.
The Chinese economic slowdown is also contributing to a pessimistic outlook in the chemical industry. “The main question is: If China is not a big growth story from an industrial perspective in the next five to 10 years, what will BASF do? There is no clear answer to this question yet,” Bray said.
Additional reporting by Yuan Yang in London
