SCIP: Shanghai's impressive chemical manufacturing facility

SCIP: Shanghai's impressive chemical manufacturing facility

About 50 kilometres south of the glittering centre of Shanghai is a strange little independent province called SCIP. Boasting its own mayor, fire service and industrial-scale power grid, SCIP has, by Chinese standards, a tiny local population. But it does have wide, well-kept streets, wooded areas and a guard-house suitable for any gated community. Mostly though, the Shanghai Chemical Industrial Park (that’s what SCIP stands for) has massive tangles of pipes and tanks and funnels and valves because it’s the world’s largest chemical manufacturing facility – and a truly impressive example of China’s global industrial power.

Twelve years ago this river delta was mostly shrimp farms. But following some $30 billion of Chinese investment, the reclaimed 30 hectares of land is now nestled behind a Dutch-built dyke and is home to a who’s-who of the chemical world: Bayer Material Science, BASF, Mitsubishi, Huntsman, 3M and more.

The Bayer Integrated Shanghai Site (BISS) is the largest tenant, bussing in 1,000 staff, serving 2,000 meals a day and running effectively 19 different factories on its site. BISS cost $3.4 billion to build and is the biggest of any Bayer Material Science plants.

Perhaps the scale of SCIP is not that surprising. We’ve come to expect breathtaking numbers from China, and Shanghai in particular. We’ve also come to expect Chinese manufacturing to be sub-standard and polluting. Shanghai’s smoggy skyline and toxic rivers are not accidents – their food scandals are legendary.

That’s not what you find at SCIP. Dr Roland Stegmuller, a Bayer veteran who’s held 19 manufacturing posts around the world and is now the site manager of BISS, says the facility is on par with its German and Pittsburgh counterparts and in some ways exceeds them.

“BISS has pioneered new developments that are now being applied back home in Europe and in other manufacturing sites,” he says.

Stegmuller claims the emission’s standards imposed by SCIP are stricter than those of Germany. An example? “Salt. One of the by-products of our business is salt, NaCl. In other countries we can simply release it. By 2017 we won’t be allowed to do this here.” Asked directly about pollution he boasts that the massive BISS complex emits nothing more harmful than carbon dioxide and water.

Health and safety also surprised me. Since 2001, BISS has experienced only one fatality, incidentally in the week before we visited. This is a remarkable record for an operation of this scale, particularly in a developing economy where OSH is taken as seriously as traffic lights. BISS has its own hospital and ambulance and three spanking new fire engines with a professional fire crew. Stegmuller complains the level of OSH reporting to the SCIP authorities is far more exacting than back in Germany. An example: Visitors to the site are given a strict briefing including strongly worded instructions about holding the handrail when using simple internal stairways -- handy for anyone who’s been out on the tiles, but otherwise pretty OTT.

All over the site a sign repeats the warning, “nothing we do is worth getting hurt for.”

Why am I telling you all this? It’s this: Our experience of Chinese manufacturing has typically been a trade-off of scale versus quality. But as with the Bayer R&D plant in my previous blog, BISS and SCIP are world-class, leading-edge facilities that combine scale and quality.

It’s a mistake to think that China is stuck in a low-cost economy. The reality is that it’s following the same trajectory that Japan and Taiwan have already pioneered as high tech, highly branded producers. As my colleague from Taiwan muttered while we drove slowly through the BISS: "We used to beat them on innovation. But how do we compete with this?"

Vincent Heeringa traveled to Shanghai as a guest of Bayer Material Science