The petrochemicals industry entered a transitional phase after the global economic slowdown in 2008-2009 that severely affected the growth of the industry. After experiencing difficult times during the downturn, petrochemical producers are now focusing on attaining both economies of scale and geographic expansion to gain a competitive advantage. Producers are seeking to create a presence in demand-rich geographies and are diversifying their portfolios to achieve higher growth rates. This has led to an increase in the number of partnership between companies of different regions. Since European and North American producers are grappling with declining demand, they are setting up joint ventures with Asian or Middle Eastern companies to sustain their profit margin. In the past two decades, majority of joint venture deals have happened in the Middle East and Asia Pacific.
The Chinese petrochemicals industry is the fastest growing petrochemicals industry in the world. As with other petrochemical markets, the Chinese petrochemicals market stumbled as recession slowed down the growth, but stimulus packages and strong demand from its large domestic market helped to revive the petrochemicals industry. The Chinese petrochemicals industry is imports-dependent, which will continue to benefit the producers in other countries such as Saudi Arabia, Japan, Korea and the US. These countries can extend their excess supply to the Chinese market. The fast growing Chinese market is attracting foreign producers who are entering into joint ventures with Chinese producers to establish manufacturing facilities in China. The booming demand for petrochemicals in China is encouraging joint ventures that demonstrate global co-operation, as per a report by GlobalData. The new report found that companies from the developed world are working with developing market China to match their advanced technology with newly expanding petrochemicals opportunities in the country. The petrochemicals industry has undergone rapid changes in the last decade, witnessing China surpass North America and Europe as the largest petrochemical consumer due to impressive demand from its large population. Growing Chinese demand provides joint venture opportunities for petrochemicals producers from other regions, and many planned projects in the region are established under joint ventures. China's government has focused on industrialization and urbanization, leading to the recent development of the Chinese petrochemicals industry. China's attempts to match production capacity to the growing demand necessitate construction of additional petrochemical plants, which provides joint venture opportunities for foreign companies, making the country a catalyst of growth within the global petrochemicals industry. It has become crucial for some major petrochemical producers to develop a presence in China in order to benefit from significant revenue and maintain a place in the modern market. Petrochemicals companies worldwide rely upon joint ventures to cope with changing business dynamics in the industry. While Europe and North America suffered significantly from the global economic crisis, the effects were relatively mild in China due to strong government support and resilient end-use sectors. A significant increase has therefore occurred in joint ventures during the last five years, seeing European and North American companies sharing their advanced petrochemicals production technologies with within the Asia-Pacific's lucrative developing market. The Asia-Pacific was home to 27 new joint venture deals during 2010, representing a majority 58% share of global joint venture deals in the year - and this number is only likely to increase. GlobalData analysis states that demand in China for basic petrochemicals and major plastics stood at 124.703 mln tpa in 2010, and is forecast to reach 215.033 mln tpa by 2015 at a Compound Annual Growth Rate (CAGR) of 11.5%. Basic petrochemicals and major plastics production increased from 29.475 mln tpa in 2000 to 95.952 mln tpa in 2010 at a CAGR of 12.5%, and is expected to reach 164.642 mln tpa in 2015. The demand growth rate in China is high as compared to the production growth rate, which makes it dependent on imports to meet its domestic demand. The growing Chinese demand in the recovery phase provides opportunities to producers in other countries who can export their excess supply to the Chinese market. Major Asian countries such as Japan and South Korea have benefited most by exporting to China. In 2010, Korea accounted for 31% of China�s total basic petrochemicals imports and 21% of major plastics imports, while Japan accounted for 23% of China�s total basic petrochemicals imports and 9% of major plastics imports.