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To further improve the strategic management capabilities of Chinese petroleum and chemical enterprises in the context of transformation and upgrading, on January 15, Li Shousheng, President of the China Petroleum and Chemical Industry Federation, sent a letter to the entire industry titled \"A Letter on Recommending That Chinese Petroleum and Chemical Enterprises’ Management Teams Study and Draw Lessons from BASF’s New Corporate Strategy.\" The letter emphasized that strategy is a choice for the future. Under the current circumstances of accelerated adjustment in the global industrial structure, intensified market competition, and faster pace of strategic transformation, the significance and role of corporate strategic management have become even more important. “However, at present, many of our enterprises do not have a clear strategy; there is a lot of randomness in their strategic development, and there is an urgent need to improve their awareness and capabilities in strategic management. ” Li Shousheng said that on November 20 of last year, BASF announced a new corporate strategy in Ludwigshafen, Germany, setting strategic goals to enhance the company’s core competitiveness in light of the new trends in its global strategic transformation. The primary goal of the new strategy is to achieve growth in sales revenue and volume. While aiming for sales revenue and growth rates that exceed those of the global chemical industry, it is also necessary to increase earnings before interest, taxes, depreciation, and amortization by 3 to 5 percentage points per year, with the dividend per share rising as well. Profit growth must be achieved while keeping the total amount of CO2 emissions constant. Li Shousheng told reporters, “The Central Economic Work Conference emphasized the need to ‘boost the vitality of micro-level entities and unleash the initiative of enterprises and entrepreneurs.’” We believe that the corporate strategy formulated by BASF in the context of transformation and upgrading incorporates many new ideas and approaches regarding strategic goals, priorities, and actions, which are highly worth learning from and emulating by Chinese petrochemical enterprises. ” President Li Shousheng specifically wrote an article titled “New Highlights and Insights from BASF’s New Corporate Strategy”. He said in the article: “This is a dynamic and ambitious development strategy.” ”He summarized the new ideas, approaches, and changes in the new strategy as “four greater focuses”: the first is to place greater emphasis on a company’s market positioning and innovative solutions. Second, greater emphasis is placed on excellent organizational practices within enterprises and the optimal combination of products. Third, more emphasis is placed on a company’s profitability and return on capital. Fourth, more emphasis is placed on corporate social responsibility and the value of employees. Dr. Klaus Müller, President of the Executive Board and Chief Technology Officer at BASF, said it provided a \"precise insight into how BASF will seek a new strategic orientation in the future.\" Li Shousheng emphasized, “The stones from other mountains can be used to polish jade.” It is hoped that domestic enterprises will, by learning from and drawing on the new strategies of globally leading multinational companies, strive to improve their strategic management capabilities, stimulate and enhance the vitality of individual entities, accelerate the high-quality development of the industry, and take an important step forward in transforming from a major country in the oil and chemical industry into a powerful one. (Pang Liping) A Letter Recommending That Management Teams in Chinese Petroleum and Chemical Enterprises Study and Draw Lessons from BASF’s New Corporate Strategy. To the chairpersons, general managers, and key leaders of petroleum and chemical enterprises: Strategy represents a choice for the future. In the current context of accelerated adjustments in the global industrial structure, intensifying market competition, and faster pace of strategic transformation, the importance and role of corporate strategic management have become even greater. On November 20, 2018, BASF unveiled a new corporate strategy in Ludwigshafen, Germany, setting strategic goals to enhance the company’s core competitiveness in light of the new trends in its global strategic transformation. The China Petroleum and Chemical Industry Federation attaches great importance to BASF’s new global strategy. It promptly invited BASF to introduce the core concepts and key priorities of its new strategy, which were then translated into Chinese. The Central Economic Work Conference stated that efforts should be made in line with the eight words \"consolidate, strengthen, improve, and smooth out,\" emphasizing the need to \"strengthen the vitality of micro-economic entities and leverage the initiative of enterprises and entrepreneurs.\" We believe that the corporate strategy formulated by BASF in the context of transformation and upgrading incorporates many new ideas and approaches regarding strategic goals, priorities, and actions, which are highly worth learning from and emulating by Chinese petrochemical enterprises. “\"The stones from other mountains can be used to polish jade.\" To further improve the strategic management capabilities of Chinese petroleum and chemical enterprises in the context of transformation and upgrading, we recommend this innovative corporate strategy from BASF to the senior managers of such enterprises. It is hoped that by studying and drawing on the new strategies of world-leading multinational companies, the strategic management level of enterprises can be improved, the vitality of individual entities can be stimulated and enhanced, high-quality development in the industry can be accelerated, and an important step can be taken toward transforming from a major country in the oil and chemical industry into a powerhouse. We are now distributing \"The New Strategy: Guiding BASF on the Path to Growth – BASF Unveils Its New Corporate Strategy on November 20, 2018\" as well as my own insights titled \"New Aspects and Insights from BASF’s New Corporate Strategy\", for everyone’s reference and study. President of the China Petroleum and Chemical Industry Federation https://mpt.135editor.com/mmbiz_jpg/Es7oLXiaiaJothjVQhK44ic30xPemIvDPe5ddPZ1xqXFJP1PWLicUOwMudG8sicOXBdDOwZybp2sx9LkkL0ggjlLnUw/640?wx_fmt=jpeg January 15, 2019: New aspects and insights of BASF’s new corporate strategy □ Li Shousheng, President of the China Petroleum and Chemical Industry Federation BASF is one of the largest chemical companies in the world. In 2017, the company’s sales revenue reached $73.357 billion. On November 20, 2018, Dr. Martin Brudermüller, Chairman of the Executive Board of BASF SE, unveiled the company’s new corporate strategy in Ludwigshafen, Germany. The primary goal of the new strategy is to achieve growth in sales revenue and volume. While achieving sales and volume growth rates that exceed the global chemical industry average, the company aims to increase its EBITDA—excluding special items—by 3 to 5 percentage points annually. It also intends to gradually raise its dividend per share. All this will be done while maintaining total CO2 emissions at current levels, thereby ensuring profitable growth. It is a dynamic and ambitious development strategy. Based on a preliminary study of BASF’s new strategy, I believe this new strategy introduces many new ideas, approaches, and changes. Collectively, these new perspectives, ideas, and changes can be summarized as \"four greater focuses\": the first is a greater emphasis on a company’s market positioning and innovative solutions. The new strategy states clearly that in order to achieve the company’s new strategic goals, \"BASF will place greater emphasis on focusing on its customers and providing them with customized services and solutions.\" ”Bo Mu Le said, “We want to let our customers experience a completely new BASF.” Therefore, we will further adjust our organizational structure to make it more customer-centric and operate more efficiently. We need to mobilize the entire company’s enthusiasm for customers in order to better meet their needs.” The new strategy focuses on using innovative solutions to address market challenges and meet customer needs. Bo Mu Le said, “BASF has been committed to developing the most attractive innovative products for its customers.” We need to enhance our competitiveness through excellent craftsmanship and top-tier technology to meet the needs of our customers. The new strategy will adjust the research and development processes, organizing the research teams in a way that brings them closer to business and customer needs, thereby reducing the time it takes to bring new products to market and accelerating the company’s organic growth. The new strategy holds that the Asian market has become a key focus for BASF, and is crucial for realizing the company’s growth strategy. China has become the world’s largest chemical market, accounting for 40% of the global market share, and will continue to drive growth in global chemical production. “By 2030, China’s share in the global market is set to rise to 50%, and BASF aims to grow alongside it. We will establish a new integrated facility in Zhanjiang, Guangdong, and expand our facility in Nanjing, which will significantly boost our growth in this dynamic market. Second, greater emphasis is placed on excellent organizational practices within enterprises and the optimal combination of products. To achieve its new strategic goals, BASF will place great emphasis on the organic growth of its internal business, significantly streamline its organizational structure and business processes, optimize its product portfolio, and further strengthen its integrated system – thereby becoming more customer-focused, as well as faster, more agile, and more flexible. The new strategy reevaluates the company’s business structure; starting in 2019, the product portfolio will be further optimized to focus the company’s capital allocation on growth-oriented businesses. The strategy divides the company’s operations into six areas, with each area comprising two business units, except for the agricultural solutions segment, which remains as a separate business area. These six areas are: chemicals (petrochemicals, intermediates), materials (specialty materials, monomers), industrial solutions (dispersions and pigments, specialty chemicals), surface treatment technologies (catalysts, coatings), nutrition and care (care chemicals, nutrition and health), and agricultural solutions. The company’s six business units will further clarify their market positions, define their competitive advantages, and build high-performing organizations capable of adapting to different competitive environments. Bo Mule said, “The focus of the new strategy is to design efficient and reliable processes; businesses that fail to meet the market goals set will withdraw from the market. In the process of business optimization and restructuring, an integrated system will continue to play a key role, enabling the efficient operation of the value chain within this integrated framework.” Thanks to the high degree of concentration in production within an integrated system, which allows for greater value addition along the value chain, the company can save at least 1 billion euros per year in costs related to raw materials, energy, and logistics. At the same time, integrated production helps to reduce the large amounts of emissions that might otherwise occur. Through the construction of these facilities, BASF will further achieve highly centralized production and efficient facility management, thus continuing to remain a leader in the industry. ” Third, more emphasis is placed on a company’s profitability and return on capital. BASF’s new strategy sets ambitious financial and non-financial goals, aiming to achieve an return on invested capital that is significantly higher than the cost of capital, thereby creating tangible added value. ”The new strategy also aims to \"maintain a leading position in the eyes of investors, create value for them that exceeds the average level of the chemical industry, and increase the dividend per share year by year.\" ”The new strategy also sets ambitious non-financial goals: by 2030, even if the company achieves significant annual production growth, it commits to maintaining global greenhouse gas emissions at their 2018 level. To date, BASF has reduced its greenhouse gas emissions by 5% compared to the 1990 level, while doubling its production capacity. In addition to achieving the goal of keeping total carbon dioxide emissions constant by 2030, the new strategy also aims for sales of premium products to reach around 22 billion euros by 2025. They believe that these products make significant contributions to the sustainable development of the value chain. To achieve this ambitious goal, BASF is launching a new excellence program to be implemented from 2019 to 2021. The aim is to generate €2 billion in additional earnings each year, starting at the end of 2021. The project will include measures in areas such as production, logistics, R&D, digitalization, automation, and organizational development. Fourth, more emphasis is placed on corporate social responsibility and the value of employees. BASF’s new strategy places great emphasis not only on improving safety and environmental standards as well as enhancing responsibility and care initiatives, but also on leveraging the role and value of the company’s employees. At the press conference, Bo Morley said, “Without our employees, none of our goals can be achieved. This is why we have set employee satisfaction metrics for the first time.” We hope that over 80% of our employees believe they can grow at BASF and remain in peak performance. ” Accelerating the enhancement of the core competitiveness of China’s petroleum and chemical enterprises, and striving to foster enterprises and enterprise groups with global competitiveness, is a strategic goal for China’s petroleum and chemical industry to transition from being a large country in the field to a strong one. BASF’s new strategy provides an excellent reference for Chinese oil and chemical companies to improve their strategic management capabilities in the new circumstances. Throughout the industry, we must earnestly study, research, and draw inspiration from the new perspectives, ideas, and changes in BASF’s new strategy. We must firmly adhere to the core objective of the corporate strategy—that “development is paramount”—and comprehensively enhance our core competitiveness as enterprises: being market-oriented, innovation-driven, efficiency-focused, service-oriented, and employee-centered. We must strive to improve the strategic management capabilities of China’s petroleum and chemical enterprises, so as to achieve high-quality development across the entire industry and make new and greater contributions toward transforming China from a major player into a global leader in the petroleum and chemical sector. The new strategy guides BASF onto a path of growth – On November 20, 2018, BASF unveiled its new corporate strategy. The key tenets of this strategy are: https://res.wx.qq.com/mpres/htmledition/images/icon/common/emotion_panel/smiley/smiley_76.png To achieve profitable growth while keeping total CO2 emissions unchanged. https://res.wx.qq.com/mpres/htmledition/images/icon/common/emotion_panel/smiley/smiley_76.png To enhance attractiveness to customers, with the goal of achieving growth rates higher than the global chemical industry average. https://res.wx.qq.com/mpres/htmledition/images/icon/common/emotion_panel/smiley/smiley_76.png To fully leverage its strengths in integration, innovation, sustainable development, digitalization, and operational excellence. https://res.wx.qq.com/mpres/htmledition/images/icon/common/emotion_panel/smiley/smiley_76.png By 2025, sales from products contributing significantly to sustainability are expected to reach €22 billion. https://res.wx.qq.com/mpres/htmledition/images/icon/common/emotion_panel/smiley/smiley_76.png To increase EBITDA, excluding special items, by 3 to 5 percentage points annually. https://res.wx.qq.com/mpres/htmledition/images/icon/common/emotion_panel/smiley/smiley_76.png To gradually raise the dividend per share each year. I. Objectives of the new strategy (1) Primary objective: “Since 2012, BASF’s EBITDA, excluding special items, has grown at an average annual rate of 8%, significantly exceeding the 3% annual increase in fixed costs.” Consequently, BASF’s profit growth also outpaced the global chemical industry’s annual growth rate of 3.7%. In addition, in recent years, the level of free cash flow has also seen significant growth, with a return on invested capital reaching as high as 15.4% recently. The primary goal of the new strategy is to achieve growth in sales revenue and volume. ” BASF focuses on achieving organic growth in its business areas. To achieve this goal more quickly, BASF will place greater emphasis on its customers, providing them with customized services and solutions. BASF will significantly simplify its structure and processes, optimize its product portfolio, and further strengthen its Verbund system, thereby becoming faster and more flexible. Bertrand Meheust, Executive Board Member for Europe and Chief Technology Officer, said: “We need to transform our organization to become more customer-centric and agile.” ” The Asian market has become a key market for BASF and is also crucial for realizing the company’s growth strategy. China has become the world’s largest chemical market, accounting for 40% of the global market total, and will continue to drive the growth of global chemical production. “By 2030, China’s share in the global market is set to rise to nearly 50%, and BASF aims to grow alongside it. The new integrated facility we are building in Zhanjiang, Guangdong, along with the expansion of our facility in Nanjing, will significantly boost our growth in this dynamic market. ” (II) Financial and non-financial goals The new BASF strategy sets ambitious financial and non-financial goals. Dr. Hans-Ulrich Engel, Deputy Chairman of the Executive Board and Chief Financial Officer of BASF Europe, said: “We aim to grow faster than the market, striving for sales and volume growth rates that exceed those of the global chemical industry.” ” BASF also aims to further improve its profitability, with the goal of increasing earnings before interest, taxes, depreciation, and amortization by 3 to 5 percentage points per year, excluding one-time items. Engel said, “In addition, BASF aims to achieve an return on invested capital that is significantly higher than the cost of capital on an annual basis.” This means we have truly created added value. ” BASF also wishes to maintain its leading position in the eyes of investors, thereby creating value for them that exceeds the average level of the chemical industry. Engel said, “Therefore, we aim to maintain sufficient free cash flow so that the dividend per share can increase year by year.” ” To achieve these ambitious goals, BASF is launching a new excellence initiative to be implemented from 2019 to 2021, with the aim of generating 2 billion euros in annual revenue starting from the end of 2021. The project will include measures in areas such as production, logistics, R&D, digitalization, automation, and organizational development. BASF has also set ambitious non-financial goals. Bo Mu Le said, “Even though we have set ambitious annual production growth targets, we are committed to keeping global greenhouse gas emissions at 2018 levels until 2030.” This means that we control the increase in carbon dioxide emissions while achieving organic growth. ” This goal encompasses major planned investment projects, such as the integrated production facility to be established in Guangdong, China. To achieve this goal, BASF will improve the management processes at its production sites, enhance efficiency, integrate resources, and increase the proportion of renewable energy in its power supply where possible. Bo Mu Le added, \"Given the high level of technology already present in our production facilities, this is a quite challenging goal; we need to find alternative ways to achieve it.\" ”He believes this requires a suitable regulatory environment in Germany, Europe, and the world as a whole. BASF has reduced its greenhouse gas emissions by 50% compared to the 1990 level, while doubling its production capacity. In addition to achieving the goal of keeping total carbon dioxide emissions constant by 2030, BASF hopes that the sales of its high-performance products will reach around 22 billion euros by 2025. These products make significant contributions to the sustainable development of the value chain. Bo Mu Le said, “Without our employees, none of the goals can be achieved.” This is why we established employee satisfaction metrics for the first time. We hope that over 80% of our employees feel they can grow at BASF and maintain their best performance. ” II. Key areas of focus for the new strategy. Brudermüller said, “We want our customers to experience a completely new BASF.” Therefore, we will further adjust our organizational structure to make it more customer-centric and operate more efficiently. We need to mobilize the entire company’s enthusiasm for customers in order to better meet their needs. ” By combining BASF’s unique expertise in the chemical industry with the clients’ professional capabilities, we can develop better solutions that not only generate profits but also benefit society. To achieve this goal, BASF is taking a series of measures to enhance transparency for its customers, improve the quality of customer services, and explore potential for joint development. BASF will focus on the following areas: product portfolio, employees, innovation, sustainable development, operations, and digitalization. (1) Further developing BASF’s business area structure. BASF has reviewed its business area structure and will begin making changes at the beginning of 2019. Bo Mu Le said, “We will optimize our product portfolio to focus our capital allocation more on growth-oriented businesses.” BASF’s new business area structure will make our direction of business, the importance of the value chain, and the role of integration (Verbund) clearer and more transparent. ” As of January 1, 2019, BASF will have six business segments, with each segment comprising two business units; only the Agricultural Solutions segment will remain as a separate business unit: ◆ Chemicals: Petrochemicals, Intermediates ◆ Materials: Functional Materials, Monomers ◆ Industrial Solutions: Dispersions and Pigments, Functional Chemicals ◆ Surface Treatment Technologies: Catalysts, Coatings ◆ Nutrition and Care: Care Chemicals, Nutrition and Health ◆ Agricultural Solutions BASF will define the market position for each business segment, identify its competitive advantages, and establish high-performing organizations capable of adapting to different competitive environments. BASF will drive organic growth through investment and innovation, as well as by pursuing appropriate mergers and acquisitions. Bo Mu Le said, “Our focus is on designing efficient and reliable processes.” Businesses that fail to achieve their desired position in the market will eventually withdraw. ” (II) Leverage the core role of the “integrated” system: The integrated (Verbund) system will continue to play a key role in BASF’s success. BASF’s product portfolio boasts unique advantages thanks to its integrated strengths in physical, technical, market, and digital aspects. An integrated system can help the company achieve a technological advantage in all areas of its business. By offering a wide range of products, BASF provides effective support to its customers. Furthermore, the value chain can operate efficiently only within an integrated system. Thanks to the high degree of concentration in production within its integrated system, BASF is able to save at least 1 billion euros per year in costs related to raw materials, energy, and logistics. At the same time, the company can also avoid the large amounts of emissions that could result from decentralized production. By establishing and developing integrated systems to achieve highly centralized production and operating fewer but more efficient facilities, BASF will continue to remain a leader in the industry. (III) Building a high-performing organization: To drive BASF’s successful transformation, the company is improving internal processes and enhancing collaboration among its employees. Employees are key to the successful implementation of new strategies. BASF will provide a flexible organizational structure to ensure that employees have the necessary tools and skills to deliver differentiated and customized products and services to customers. Engel said, “We must become faster and more flexible in order to achieve high efficiency and effectiveness.” ” As part of the development of its organizational structure, BASF is creating a more streamlined structure for R&D and other functional management departments. By integrating most functional services into the operations department, it brings employees closer to customers. Furthermore, the company can manage functions and research activities that are independent of the operational departments more effectively. Approximately 20,000 employees worldwide will be directly or indirectly affected by this restructuring. Engel said, “We hope that all these measures will enable better differentiated development of various business units and significantly improve work efficiency.” ” When the time is right, more decision-making power will be transferred to the business units. Engel said, “This means that while there is more managerial freedom, the associated responsibilities are also clearer.” ”While improving the efficiency of its various business units, BASF will also enhance customer satisfaction. To ensure that BASF can seize potential market opportunities in each **, the company will introduce complementary market development models. The operations department will decide which markets are key markets and assign its own teams to provide services there, while assigning other markets to local organizational teams for operation. Not only that, but BASF has also established a process simplification task force dedicated to streamlining key processes. The company will simplify and shorten processes to speed up decision-making. (IV) Innovative solutions to meet challenges – BASF has been committed to developing the most attractive innovative products for its customers. Bo Mu Le said, “We need to enhance our competitiveness through excellent craftsmanship and top-notch technology to meet the needs of our customers.” ”The new strategic adjustment brings the research team closer to the needs of business and customers. BASF’s research and development functions will not only become more closely integrated organizationally but will also place greater emphasis on customer needs. This will help shorten the time to market for products and accelerate the company’s organic growth. (5) Driving excellent production and operations – Excellent operational performance has always been one of BASF’s key strengths. Engel said, “Customers want us to deliver products according to specific requirements and timelines.” To achieve this, we must operate production safely, efficiently, and reliably. ”BASF will improve the reliability and flexibility of the plant. Therefore, BASF has increased its dedicated budget for improving operational excellence to 400 million euros per year. This is far above the average level in recent years. (VI) Advancing the company-wide digitalization process: Digitalization offers unprecedented opportunities for the entire lifecycle of BASF’s assets. For example, simulating different processes or investment ideas on a computer can help minimize costs. Augmented reality technology has also been used to support the work of BASF employees in daily operations. BASF aims to digitize more than 350 production sites worldwide by 2022. Digitalization will become an integral part of BASF’s business. BASF will create additional value for customers through digitalization, develop its business, and improve efficiency. Digitalization will also enhance the creativity of R&D departments, and it will play an even greater role once the supercomputer Quriosity is given more computing tasks. To ensure the maximum value is derived from data, BASF will further improve data availability and quality, provide the necessary infrastructure to connect to backend systems, and use existing data to support decision-making. BASF will accelerate its pace, deepen its impact, and broaden its scope in the process of digitalization, thereby staying ahead of its peers in the chemical industry. III. About BASF At BASF, we create new functions for chemistry—pursuing a sustainable future. We combine economic success, social responsibility, and environmental protection. BASF employs over 115,000 people worldwide, contributing to the success of customers in almost all ** and industries. Our products fall into four main business areas: chemicals, specialty products, functional materials and solutions, and agricultural solutions. In 2017, BASF’s global sales exceeded €60 billion. BASF’s shares are listed on the stock exchanges in Frankfurt (BAS), London (BFA) and Zurich (BAS). Forward-looking statements: This press release contains forward-looking statements that are based on the current assumptions, estimates, and expectations of BASF’s management, as well as on available information. These statements do not guarantee future performance; they involve risks and uncertainties that are difficult to predict, and the assumptions regarding future events are not accurate. Many factors may cause BASF’s actual results, performance, or achievements to differ from those implied or expressed in these statements. We assume no new liability regarding the forward-looking statements contained in this press release.