Bayer chief executive Manfred Schneider said the company had signed an agreement Wednesday with the Shanghai Chemical Industry Park Company to build the production facility in Caojing, near Shanghai.

The signing ceremony was witnessed by Chinese Premier Zhu Rongji and German Chancellor Gerhard Schroeder, in China for an official visit.

Bayer plans to erect major plants in Caojing to manufacture coating raw materials, thermoplastics, polyurethane raw materials and basic chemicals.

Schneider said this was Bayer's biggest single investment project in its 138-year history and was one of the largest investments by German industry in China. It was also one of the biggest investments in China's chemical industry.

The deal was a clear signal of confidence in the China market and Asia-Pacific region despite the global economic downturn, Schneider told a news conference in Beijing.

It was helped along by China's almost-completed entry into the World Trade Organisation (WTO), he added.

"Economic growth coupled with increasing social economic stability, greater transparency, and clearer regulations, as a result of China's imminent accession to the WTO, will continue to foster the confidence of foreign investors. This in turn is likely to drive further economic growth," Schneider said.

From 1990 to 2000, Bayer's sales in the Greater China region, which includes Taiwan and Hong Kong, grew by an average of 17 percent.

The area accounts for 23 percent of Bayer's sales in the Asia-Pacific region and is Bayer's second-largest market in the region after Japan, which it is expected to overtake in terms of sales revenue by 2010, Schneider said.

The company, which posted sales of US$700 million in China's mainland last year, plans to at least double its sales volume in the Greater China region by 2005 from the US$1 billion last year.

Polymer products, used in China's booming construction industry, as well as in the automobile, electronics and refrigeration sectors, made up 66 percent of sales in China, Bayer said.

Medicine for humans and animals made up 15 percent and chemicals, used mainly in textiles, leather and adhesive industries, comprised 10 percent.

(China Daily November 2, 2001)