Dissolving loss-making subsidiaries and embracing synthetic biology! BASF and Evonik continue heavy investment in China

Recently, Huaheng Biology—a leading listed synthetic biology company—announced it had signed a Memorandum of Understanding (MoU) on strategic cooperation with global chemical giant Evonik. The two parties will leverage their respective strengths to jointly provide high-quality bio-based amino acid products to global customers, driving innovation and development in the field of animal nutrition and health. Notably, on the same day as the signing, Weilan Biology—a leading listed enzyme preparation company—issued an announcement stating it had signed a Settlement Agreement with Evonik, and would initiate dissolution and liquidation procedures for their joint venture and its Qingdao branch. The company to be dissolved is Evonik-Weilan, a Sino-foreign joint venture established in 2023. Its core business involves probiotics for animal feed. The company’s registered capital amounted to RMB 37.5 million, with Evonik holding a 55% stake. Going forward, both parties will sign a new private-label manufacturing agreement. According to Evonik-Weilan’s 2024 annual report, its annual revenue was only RMB 32.93 million, while its net loss reached RMB 6.48 million—consistent with the stated rationale in the report: “in light of the joint venture’s actual operational performance and both parties’ future business plans.” Animal Nutrition: Evonik China’s Three-Stage Leap Evonik’s collaboration with Chinese bio-manufacturing enterprises dates back to 2018. At that time, Evonik signed a cooperation agreement with Fufeng Group—the industry leader in biological fermentation—authorizing Fufeng to produce L-threonine (ThreAMINO) under Evonik’s technology license. As a key step to expand its presence in the Chinese market, this marked the first time Evonik supplied this product globally through cooperative production. L-threonine is an essential amino acid that animals cannot synthesize on their own and must therefore obtain via feed supplementation. Appropriate addition of this product can enhance animal feed intake, body weight gain, and overall feed nutritional value. Then came 2023, when Evonik partnered with Weilan Biology to establish the joint venture “Evonik-Weilan,” focusing on animal gut health products—including probiotics and formulated feed additives—and launching multiple probiotic formulations and functional feed additives. The latest cooperation just announced with Huaheng Biology likewise centers on animal nutrition. In the official cooperation announcement, the head of Evonik’s Animal Nutrition business line noted: “Huaheng possesses highly efficient, large-scale biotechnological fermentation capacity and strong technical advantages.”

Germany wakes up: Behind 34 reforms lies an industrial powerhouse rebooting its system

Germany has now woken up: industrial electricity prices are being capped directly at €0.06 per kWh, with no change for energy-intensive enterprises over five years. This effectively tells companies like BASF: “Come back—we’ll shoulder your cost burden.” Deadlock Two: Excruciatingly slow approvals drive away capacity CATL’s Thuringia factory in Germany took nearly four years—from land acquisition to commissioning—with delays piling up across over a dozen checkpoints, including environmental impact assessments and construction permits. By contrast, a factory of comparable scale in China could deliver products within 12 months. Similarly, Intel’s chip factory in Magdeburg has been repeatedly halted due to approval bottlenecks. Under the new reforms, approval timelines for major industrial projects will be compressed to under three months—with fully digitized processes. This marks a sharp pivot from “rule-first” to “speed-first.” Deadlock Three: Full-blown fear of industrial hollowing-out Orders for automotive components, precision machine tools, and specialty chemicals are shifting toward Eastern Europe, Asia—even North America. A survey by the German Chamber of Commerce and Industry found that nearly one-third of industrial enterprises are considering relocating production overseas. This fear has triggered an unprecedented decision: direct state intervention, with €100 billion earmarked for chips, batteries, and hydrogen—using subsidies to anchor TSMC, Northvolt, and Bosch’s new factories firmly on German soil. One sentence captures the essence of the 34 reforms: As global industrial competition escalates from the enterprise level to the national-system level, Germany has chosen not merely to referee—but to enter the arena itself. II. Three Shocks: Chinese Enterprises’ “Comfort Zone” Is Being Torn Open Reform is not news—restructuring is. For domestic manufacturing, export, and overseas expansion enterprises, this wave of disruption is hitting harder—and faster—than anticipated. Shock 1: The map of manufacturing cost advantages is being redrawn; the “offshoring to China” narrative may reverse BASF’s Zhanjiang project was once emblematic of “fleeing Germany.” Yet today, German industrial electricity prices have nearly halved, coupled with R&D tax credits and accelerated depreciation of equipment—making manufacturing costs for many high-value-added segments suddenly “cheap” again. The real impact is already visible: Though BASF continues expanding in Zhanjiang, it has recently reassessed its German production layout and begun negotiating supplementary energy subsidy agreements with state governments—to safeguard its core facilities in Ludwigshafen. Likewise, Evonik—a leading specialty polymer company—had planned to locate part of its production lines in Shanghai Chemical Industry Park but has now decided instead to expand its Marl site. What does this mean? Industrial parks in China counting on承接 European capacity transfers will find that clients haven’t said “no”—but rather, the numerical gap between their quotations and those of German competitors is narrowing before their very eyes. Orders previously won purely on cost differentials may overnight return to the banks of the Rhine. Shock 2: Localization subsidies erect a “soft wall”—selling products alone is becoming increasingly insufficient A subtle thread runs through Germany’s reforms: access to green electricity pricing and tax incentives often hinges on meeting thresholds such as “local manufacturing share” and “European supply chain compliance”—mirroring the U.S. Inflation Reduction Act almost exactly. The industries hit hardest are photovoltaics and lithium-ion batteries. LONGi Green Energy and JinkoSolar command roughly half the European solar module market, relying on superior quality and competitive pricing. Yet once Germany introduces additional subsidies for projects using domestically produced batteries or inverters, Chinese products get squeezed out of the “premium segment,” forced into purely market-driven, unsubsidized competition—where margins instantly evaporate. BYD’s electric buses have repeatedly won contracts in Germany—but new tender documents now include bonus criteria such as “minimum 40% European assembly ratio for battery systems.”

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Sources report BASF and Evonik are in discussions regarding a potential merger to consolidate Europe's chemical sector. Speculation drove Evonik shares up 7%, though both companies declined to comment on the reported takeover interest.

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BASF, Evonik in contact over possible deal, source says

BASF, Evonik in contact over possible deal, source says

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