Basf(US:BASFY) Sou Hu Cai Jing·2025-10-29 09:36Core Viewpoint - The article discusses the ongoing deindustrialization in Germany, drawing parallels to the historical Morgenthau Plan, highlighting the struggles of German companies like BASF and the broader implications for the German economy [1][11]. Group 1: BASF's Situation - BASF has been facing significant losses at its Ludwigshafen site, with billions of euros in deficits, while simultaneously investing in its integrated site in Zhanjiang, China, which is set to begin production by the end of 2025 with a total investment of approximately €10 billion [1]. - The new production facility for neopentyl glycol at the Zhanjiang site has an annual capacity of 80,000 tons, increasing BASF's global capacity from 255,000 tons to 335,000 tons [3]. - The integrated production model used in Zhanjiang mirrors the successful approach from Ludwigshafen, focusing on cost reduction and efficiency [3]. Group 2: Economic Challenges in Germany - The rising energy costs, particularly due to the cessation of Russian gas supplies, have significantly impacted German chemical companies, leading to a projected 25% to 30% increase in corporate bankruptcies by 2025 [5]. - A report from Creditreform indicates that the number of bankruptcies in Germany could reach a ten-year high in 2024, with an increase of 24.3%, totaling around 22,400 companies [5]. - The automotive sector is particularly hard-hit, with Volkswagen planning to cut over 700,000 units of production and Bosch announcing a reduction of approximately 22,000 jobs in Germany [7]. Group 3: Factors Driving Companies Abroad - German companies are relocating not just for cost reduction but also due to market factors, as China offers a complete industrial chain and a vast consumer market, significantly lowering logistics costs [9]. - The German government's energy policy failures, high labor costs, bureaucratic challenges, and burdens from the "green transition" have deteriorated the business environment in Germany [9]. - In contrast, China provides stable energy supplies, efficient government services, and robust infrastructure, making it an attractive destination for investment [9]. Group 4: Long-term Implications - BASF's commitment to using 100% renewable energy at its Zhanjiang site by 2025 reflects a long-term strategy in the Chinese market, indicating a shift in investment focus [11]. - The situation in Germany serves as a warning to other countries about the importance of maintaining a strong manufacturing base and stable industrial policies [11][13]. - The global shift in industrial dynamics emphasizes the necessity of complete supply chains, stable energy supplies, and favorable business environments for sustaining manufacturing advantages [13][14].