New Materials covers a wide range of fields and generally refers to newly emerging materials with superior performance and special functions, or traditional materials with performance that is significantly improved after alteration. Positioned in the middle and upper reaches of the industrial value chain, the sector is the foundation that provides technological solutions for many other important industries, such as semiconductors, aerospace, and medical devices.
During our research for the 2024 China Company Transformation Indicator (CCTI), we investigated the leading new materials companies in China. It is no surprise to see the top 10 companies in China dominated by foreign multinational companies (MNCs), as China is a relative newcomer in this field, while foreign companies, such as Samsung and Honeywell, have strong global competitive advantages.
However, domestic companies like Beijing Easpring Material Technology, a leading supplier of lithium battery cathode materials, and Semcorp, specializing in the development and manufacture of advanced materials and the world’s largest producer of lithium-ion battery separator film by volume (both suppliers to LG Chem, CATL, and BYD) have made significant strides. Moreover, beyond the top 10, there are several other domestic Chinese challenger companies represented in the CCTI.
China’s “14th Five-Year Plan” explicitly calls for the development and expansion of a New Materials industry, to ensure significant application demands and achieve a leading position in material development. Our results show that Chinese companies should emphasize R&D Investment, Business Diversity as well as ESG to catch up with today’s top-performing companies.
A full description of each key factor is in the Methodology section of the white paper.
As the biggest MNC, South Korean Samsung Electronics has achieved significant success and established its leading position in the field of new materials and semiconductors. It was ranked number one across many factors from R&D and Early Innovation to China Policy Power and Business Diversity.
Samsung’s top ranking in R&D and Early Innovation indicates a strong commitment to pushing the boundaries of new material technology. On Memory Tech Day 2023, Samsung Electronics addressed its commitment to overcoming hyperscale era challenges through innovations in transistor structures and materials, including developing new 3D structures for sub-10nm DRAM chips.
Samsung is also actively researching “hafnia ferroelectrics”, aimed at increasing memory semiconductor capacity significantly by advancing 3D NAND flash memory technology to 1,000 layers by 2030. Its business diversity and strong resilience rankings reflect a broad and adaptable business approach.
Samsung’s success in China also relies on strategic partnerships with Chinese companies, including AAC Technologies, BYD, and Chengdu Xuguang Technology, underscoring its commitment to leveraging advanced technology from leading Chinese suppliers.
Honeywell’s balanced score for Core Resilience and New Growth Engines demonstrates a well-rounded strategy that balances innovation with operational excellence. Years of effort in establishing a comprehensive localized value chain in China has paid off, with Honeywell’s business spanning aerospace, building technologies, performance materials & technologies, and safety & productivity solutions.
Honeywell’s “East for East” strategy, introduced more than 20 years ago, has enabled the company to study China’s national policies and provide end-to-end solutions addressing specific industry challenges. Its commitment to sustainability and energy efficiency has resonated well with Chinese market trends, leading to collaborations, like the one with the Low Carbon Smart Building Research Institute.
In the first half of 2023, Honeywell launched several initiatives in China, including the Sustainable Development Digital Innovation Center and the UOP China Olefins Technology Support Center. The company has also published sustainability white papers to support China’s energy transition.
Renesas Electronics stands out with high rankings in Business Robustness and Early Innovation, signaling a company that is agile and quick to adapt to market changes while investing in new technologies. Renesas invested 220 billion yen in research and development in 2023, representing approximately 15% of its total sales, with plans to maintain this level of investment.
The company has also expanded its Business Diversity through strategic acquisitions, including Reality AI in 2022 and Panthronics in 2023. These acquisitions have enabled Renesas to introduce a range of solutions leveraging AI technology, allowing customers to achieve faster, more accurate data processing while minimizing computational power and energy consumption.
Also among the leaders, China’s Beijing Easpring Material shows superior performance with strengths in Business Success, Robustness, and Early Innovation. Despite facing multiple challenges in 2023, including economic volatility and intense market competition, Easpring Material managed to improve its net profit margin to 12.7%, up from 10.6% in 2022.
The company adopts an innovative R&D model, relying on three major research institutes to build an integrated innovation platform. As a global leader in lithium battery cathode materials, it has earned numerous national and provincial honors and qualifications. Easpring Material is also actively innovating its marketing strategies, emphasizing “expanding the Chinese market, strengthening the European market, and optimizing the American market.”
Top-ranked companies overall also ranked high in R&D, Innovation, and Business Diversity, underscoring the critical role that innovation plays in driving success in the New Materials sector.
The top-performing companies – Samsung, Honeywell, and Renesas – have all excelled in both core resilience factors and factors related to new growth engines, indicating the benefits of a balanced, long-term approach to business operations.
Most local companies have work to do in terms of ESG. As ESG practices become increasingly important to stakeholders, companies with poor ESG practices may lose customer trust and loyalty.
4. Business Diversity matters in the long run
Inadequate Business Diversity is a common trait for most Chinese companies. Foreign MNCs often have more extensive and longer experience in diverse international markets and greater resources to invest in R&D, enabling them to innovate and diversify their product lines more effectively.
5. Two rising stars
Beijing Easpring Material Technology and Semcorp have broken into the top 10 and their focus on high-demand products, strategic partnerships, and capacity expansion has resulted in strong financial performance.
Chinese companies must focus on increasing R&D investment, diversifying their business portfolios, and improving their ESG practices.
As China continues to prioritize the development of its New Materials industry, domestic companies face both challenges and opportunities. While foreign MNCs currently dominate the sector, the emergence of strong domestic players like Beijing Easpring Material and Semcorp signals a shifting landscape.
To compete effectively, Chinese companies must focus on increasing R&D investment, diversifying their business portfolios, and improving their ESG practices. By leveraging China’s robust manufacturing capabilities and aligning with national development goals, domestic New Materials companies have the potential to narrow the gap with international leaders and play a crucial role in driving home-grown Chinese innovation across the country’s various high-tech industries.
Discover the full results: IMD China Company Transformation Indicator 2024
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