British chemical industry: attempt at production transfer to China.

Investments made by the British chemical industry in China are mainly concentrated in four aspects: large projects of petrochemicals, basic materials and synthetic materials (including synthetic resins and synthetic fibers) with oil refining and ethylene production as the lead, joint venture projects of traditional advantageous products such as tires, dyestuffs, coatings and pesticides, projects of new-field fine chemicals and specialty chemicals with the Chinese market as the target and production transfer of some products to China to use its huge market volume and cheap labor.

Once the EU "REACH" act starts implementation, the export of chemical products from China to Britain and EU will face trials of registration, evaluation and permission. Based on the estimation made by domestic scholars, the 5% export cost increase will greatly weaken the competitiveness and reduce the profit in Chinese chemical enterprises. Besides, chemical producers or exporters in Britain will without doubt shove the expensive charges for registration and evaluation to consumers. The import cost for Chinese chemical enterprises will therefore increase by 4% and a price rise of products in chemical downstream enterprises will also be triggered.

Good opportunities for the cooperation between the two countries are however hidden in these threats and challenges. As a matter of fact, the chemical industry in Europe including Britain is dwindling and it is an inevitable trend for their chemical plants to be relocated to Asia. The EU "REACH" act is one of the key factors for the difficult subsistence of British chemical enterprises in their own countries and the attempt at moving their chemical plants to China. Quite a few British chemical enterprises think that it is imperative to move their plants to other countries and China is one of the main target countries.