Air Liquide Group, the world's largest industrial gas producer by revenue, has launched the second phase of its investment program, called Tengfei II, in China this year. The program caters to the country's growing demand for oxygen, nitrogen, hydrogen and other gases.

The French company started the first phase of its investment program, Tengfei I, in 2007. The program has planned an investment of $398 million and employment of more than 500 new employees every year. Currently, the company has 4,000 employees operating 64 plants in 16 provinces.

Remi Charachon, president of Air Liquide (China) Holding Co Ltd, says Tengfei II will run until 2020 and the French company will continue strong investment and maintain good profitability in China, especially in its west and northwest regions.

The new investment will be spent on expanding Air Liquide's manufacturing facilities, on-site production, technology research, medical gas supply network and Chinese companies' outsourcing production of non-core products.

Industrial gases and related technologies are indispensable to a wide range of industries. They can be applied in healthcare, such as medical oxygen and anesthetic gas, clean energy, high-tech industries such as advanced coal gasification, metallurgy, chemicals, petrochemicals, automotives, food and pharmaceuticals, which are among China's top development priorities.

"China's policies to cut greenhouse gas emissions and improve energy efficiency have offered industrial gas makers great opportunities to maintain a fast growth rate in the world's second-largest economy," says Charachon, who became Air Liquide's China head in 2004 and is also chairman of Singapore-based Asia Industrial Gas Association for China.

In the past two decades, China's inexpensive labor force and resources have assisted the boom in its manufacturing sector, which has had the unfortunate side effects of low profit, heavy pollution and increased e015 from 2010 levels.

China's coal-fired power plants, petrochemicals companies and steel and cement producers have all scrambled to reduce emissions to prevent having their bank loans stopped or operating licenses revoked by the government.

Charachon says under such circumstances China is seeking high-standard technologies to produce gasoline with lower sulfur, a process that needs hydrogen.

"There are huge projects linked to energy, for instance transforming coal into gasoline or synthetic natural gas requiring a huge quantity of oxygen and also some other technologies."

The 51-year-old says the emerging trend of outsourcing non-core products to big companies has also brought opportunities to Air Liquide to expand into new regions.

It recently formed a joint venture with Maoming Petrochemical, a subsidiary of China Petroleum & Chemical Corp in Guangdong, to build an air separation unit with a capacity of 3,000 tons of oxygen daily to provide gases for the coal-to-hydrogen project of its existing refinery.

Sun Fuquan, a researcher at the Chinese Academy of Science and Technology for Development in Beijing, says demand for industrial gases will continue to surge over the next decade because of the rapid development of China's healthcare, electronics, photovoltaic, engineering, environmental and urbanization-related industries.