Bayer AG, the Germanhealth care and chemical giant, is betting on the fast-growing Chinese market to revitalize its business, following its recent decision to spin off part of its declining chemical commodity business.

The company plans to expand investment in healthcare, agrochemicals and, most importantly, in the material science business in China to cash in on market growth, said Bayer's Chairman Werner Wenning on Friday.

"China has successfully assumed the role of the growth engine for Asia-Pacific,'' said Wenning at a press conference. "China therefore has highest priority in our strategic development plans.''

On Wednesday, Bayer began the construction of a new US$450 million polycarbonate plant in Caojing, Shanghai, as part of its US$3.1 billion investment package into the integrated production site by 2010.

The plant, which will produce makrolon, a high-tech plastic used in products such as compact discs, DVDs and roofing systems, aims to start production in 2006.

The production is expected to expand to a total capacity of 200,000 tons a year eventually.

The investment comes at a time when the company plans to divert most of its chemicals activities and part of its polymer business into a new company and focus on healthcare, crops and materials and end a traditional four-pillar structure.

Calling the investment "timely,'' Wenning said polycarbonate demand in China is expected to grow by 18 per cent annually in coming years.

He said three-fourths of Bayer's investment in material science will be allocated to China. Sales from its materials business are expected to double in the next decade.

Accordingly, the company aims to generate more than a quarter of the material science unit's total sales -- about 7.4 billion euros (US$8.7 billion) in 2003 -- in the Asia-Pacific region by 2007, up from the current 18 per cent.

Experts, however, have expressed concerns over potential overproduction in the Chinese market as other multinational giants like BASF are also constructing similar production facilities in China.

Wenning dismissed the doubts, saying some of the products will be exported and the production expansion will be done step by step according to market conditions.

He also said the products from the Caojin plant are competitive thanks to its technological advantages.

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