German-based Merck KGaA, the world's leading pharmaceutical and chemical group, will soon open a liquid crystal (LC) laboratory in Shanghai this month to speed up the localization of its LC business in China.

The new laboratory will not be very big to start, with less than 20 staff providing supportive services to its clients in China, said Alasdair Nigel de Mouilpied Jelfs, managing director of Merck Chemicals China.

The new laboratory will bring staff from Merck's headquarters in Germany and also try to build a local team. The lab will allow Merck and its clients work more closely, Jelfs said.

"China is the principal market for the LC industry and one of the reasons that we are market leader in liquid crystals is that we've always been very close to the customers in providing the technical support that they need to effectively use our products," said Jelfs.

According to Jelfs, during the first stage, the laboratory will focus on application support and customer service. Once it develops to the second stage, the laboratory will focus more on the local development of the LC products for the expanding business in China.

"Stage one is already planned and we simply have to execute that. I anticipate that we will move onto stage two within the next two years," he said.

Jelfs said China was clearly identified as a strategic country at the group's executive conference held in Germany three weeks ago. "For Merck, it's one of the less than ten strategic countries worldwide," he added.

Jelfs said the business scale of the chemical division is a few billion US dollars and he expected this year's growth rate to achieve more than 20 percent. "The current economic situation worldwide is not looking as optimistic as everybody would hope, and that is having some effect on Merck. But our third quarter results were very healthy. And in China, I would say that we don't feel any crisis at the moment," he said.

At the moment, China generates less than 10 percent of the total profits for the whole group. However, as China was identified as a strategic market for Merck, the figure is expected to continue to grow in the next few years, Jelfs said.

Merck expected to see its business in China hit a year-on-year growth of more than 20 percent consistently for the next few years.

"It's an important market for growth both in its pharmaceutical sector and chemical sector," Jelfs said.

He said based on his 25-year experience in the industry, China's LC industry has witnessed great changes and improvement. However, China will remain a factory base for the LC industry, potentially becoming the biggest factory for the sector. Innovation in China's LC industry has not come yet.

Merck aims to help improve innovation in China's LC business with activities such as seminars every two years and forums, Jelfs said.

The company also plans to increase the workforce and management skills of their employees in its China offices in the future.

Merck initiated its business in China in 1900. It currently has main offices in Beijing, Shanghai, Guangzhou and Hong Kong and extends its sales network in 18 cities, employing more than 800 people.