Sus­tain­abil­ity at heart of Ak­zoNo­bel strat­egy

Dutch paints, coat­ings com­pany of­fers global prod­ucts, lo­cal so­lu­tions in China

China Daily - - Q&A WITH CEO - By ZHENG XIN zhengxin@chi­nadaily.com.cn

New home sales in China have slowed down, but Thierry Van­lancker, CEO of the Nether­lands-based paints and coat­ings com­pany Ak­zoNo­bel, says he is not wor­ried.

De­spite the cool­ing of China’s real es­tate mar­ket, the neg­a­tive ef­fect on the com­pany’s busi­ness in China has been lim­ited, Van­lancker said dur­ing a re­cent busi­ness trip in Shang­hai.

“Although sales of new homes have slowed down, the de­mand for re­paint­ing among Chi­nese con­sumers born in the 1980s and the 1990s is, on the con­trary, in­creas­ing rapidly,” he ex­plained.

“Con­sump­tion up­grades are lead­ing to higher de­mand for qual­ity and en­vi­ron­men­tally friendly prod­ucts, and we want to tap into these chang­ing re­fur­nish­ing habits.”

In West­ern economies, home­own­ers re­paint their prop­erty every three years on av­er­age, com­pared to at least eight years on av­er­age in China, but the gap is nar­row­ing, ac­cord­ing to the com­pany.

“We are still con­fi­dent in the Chi­nese mar­ket in the medium and long term, as the coun­try’s re­paint­ing sec­tor has mas­sive po­ten­tial, with plenty of space to ex­plore.”

In an in­ter­view with China Daily, Van­lancker shared his views on China’s paints and coat­ing sec­tor, fur­ther open­ing-up, and the com­pany’s in­vest­ment strat­egy in the coun­try.

Ak­zoNo­bel saw higher profitabil­ity in the third quar­ter of 2018. How did the Chi­nese mar­ket con­trib­ute to it?

China was a sig­nif­i­cant con­trib­u­tor to our solid per­for­mance last year. The coun­try is al­ready Ak­zoNo­bel’s largest sin­gle mar­ket, with 22 man­u­fac­tur­ing sites and more than 6,000 em­ploy­ees, ac­count­ing for about 17 per­cent of our global work­force.

Our per­for­mance in China has been strong, with much progress made. Last year, we opened a devel­op­ment lab for our Ma­rine and Pro­tec­tive Coat­ings unit, our first-ever Du­lux con­cept store in Shang­hai, as well as our largest pow­der coat­ings fa­cil­ity in Changzhou in Jiangsu prov­ince.

We also con­trib­uted to many iconic projects in China last year, such as the Hong Kong–Zhuhai– Ma­cao Bridge.

What are your best-sell­ing brands in the coun­try so far, and what is be­hind their suc­cess?

We have a com­pre­hen­sive prod­uct port­fo­lio, in­clud­ing pow­der coat­ings, coil coat­ings, pro­tec­tive coat­ings and dec­o­ra­tive paints, all for dif­fer­ent in­te­rior and ex­te­rior ar­chi­tec­tural pur­poses. For ex­am­ple, we have our prime dec­o­ra­tive paint brand Du­lux, as well as Le­vis, our pre­mium dec­o­ra­tive brand, to meet our con­sumers’ dif­fer­ent needs. We also have our world-lead­ing In­ter­na­tional and In­ter­pon brands, as well as Du­lux Pro — the pre­mium ex­te­rior wall paint.

As more home­own­ers in the coun­try are em­brac­ing high­erqual­ity and eco-friendly build­ing ma­te­ri­als, what op­por­tu­ni­ties do you see for your com­pany?

Sus­tain­abil­ity is at the heart of Ak­zoNo­bel’s strat­egy, and we have a broad lineup of wa­ter-based and sol­vent-free prod­ucts that are much more eco-friendly than tra­di­tional prod­ucts.

China’s ris­ing sus­tain­abil­ity stan­dards en­cour­age highly ef­fi­cient, high-stan­dard and large-scale com­pa­nies, while dis­cour­ag­ing the op­po­site. We see a lot of op­por­tu­ni­ties not only for home dec­o­ra­tion paints, but also in per­for­mance coat­ings, and we think it will pro­mote the health­ier devel­op­ment of the over­all in­dus­try.

How do you com­pete with global as well as lo­cal play­ers? Who do you think is your big­gest com­peti­tor in China?

We are ex­perts in color, with our Color of the Year an­nu­ally set­ting home dec­o­ra­tion trends for the com­ing year.

We are also ex­perts in pro­tec­tion. Our per­for­mance coat­ings can be seen on land­marks all over the world, from the Brook­lyn Bridge in New York City to the Fux­ing bul­let train in China.

In ad­di­tion, we are lead­ers in sus­tain­abil­ity, lo­cal­ized re­search and pro­duc­tion, and lo­cal dis­tri­bu­tion. Our strong sup­ply chains al­low us to meet cus­tomer de­mands glob­ally with tai­lored so­lu­tions.

How would you de­scribe China’s paints mar­ket?

China is a large, rapidly chang­ing coun­try with wide di­ver­sity. For dec­o­ra­tive paint­ing, what looks nice in a small town in North­east China may not work for metropoli­tan ar­eas. Con­sumers look for best prac­tices around the world and form their own aes­thetic stan­dards, so the trends are con­stantly evolv­ing, while re­main­ing unique.

The same goes for per­for­mance coat­ings. Dif­fer­ent cus­tomers have dif­fer­ent re­quire­ments. As Chi­nese cus­tomers keep in­no­vat­ing, so should we, to keep up with their de­mands.

Last year marked the 40th an­niver­sary of China’s re­form and open­ing-up pol­icy. How has the pol­icy of­fered op­por­tu­ni­ties for your com­pany in China?

Ak­zoNo­bel was one of the ear­li­est Dutch com­pa­nies to en­ter the Chi­nese main­land af­ter its re­form and open­ing-up com­menced 40 years ago. We have been hon­ored to wit­ness the great­est eco­nomic mir­a­cle of the 20th cen­tury, and have many rea­sons to be­lieve new mea­sures will cre­ate new op­por­tu­ni­ties for in­ter­na­tional and do­mes­tic com­pa­nies alike.

In the past 40 years, mil­lions of miles of roads have been built; bul­let trains and air­planes now make up a vast in­fra­struc­ture net­work; high-speed in­ter­net is chang­ing the way we live; and, most im­por­tantly, hun­dreds of mil­lions of peo­ple have been lifted out of poverty and are em­brac­ing medium-in­come life­styles. Re­form and open­ing-up will only un­lock new de­mand and new po­ten­tial for the coun­try. Just think­ing about it makes me ex­cited.

Do you think China’s fur­ther re­form and open­ing-up will el­e­vate its busi­ness en­vi­ron­ment to new heights, and in­ject new strength into the in­ter­na­tional scope of the paints and coat­ings in­dus­try?

Yes, it cer­tainly will. We have ben­e­fited hugely from China’s re­form and open­ing-up, grow­ing our busi­nesses along with our cus­tomers and part­ners.

No com­pany could truly be in­ter­na­tional with­out China. We not only sell our global prod­ucts here, we tai­lor prod­ucts for China. We not only re­search lo­cal so­lu­tions but also el­e­vate these so­lu­tions to a global scale.

China is a key mar­ket in our global foot­print, and with a strength­ened China, we are all strength­ened to­gether.

China will con­tinue to proac­tively at­tract for­eign in­vest­ment and safe­guard the le­git­i­mate in­ter­ests of for­eign-in­vested busi­nesses. How will that ben­e­fit your busi­ness?

We feel very en­cour­aged by this ap­proach and are look­ing for­ward to the govern­ment’s next steps to cre­ate a more fa­vor­able busi­ness en­vi­ron­ment. We can help to el­e­vate China’s paint in­dus­try to a more im­por­tant role in the global sup­ply chain and bring China’s so­lu­tions to the en­tire world.

What’s your vi­sion for Ak­zoNo­bel in the next five to 10 years, and what type of role does the Chi­nese mar­ket play in that?

Ak­zoNo­bel will con­tinue to con­cen­trate on paints and coat­ings, act­ing as the world’s ref­er­ence point for color and pro­tec­tion.

I be­lieve China will only be­come more im­por­tant in the fu­ture. It will be a key pow­er­house in man­u­fac­tur­ing and re­search, fur­ther ben­e­fit­ing not only cus­tomers in China but also around the world. Our fa­cil­i­ties in China will in the fu­ture set global stan­dards in qual­ity, sus­tain­abil­ity and other as­pects.

How do you think the global paint­ing and dec­o­ra­tion in­dus­try has evolved over the past decade, and how have Chi­nese con­sumers in­flu­enced that evo­lu­tion?

The in­dus­try has changed a lot. We find Chi­nese aes­thet­ics and West­ern aes­thet­ics are be­com­ing in­creas­ingly in­ter­twined, and that in­flu­ences our de­signs for color and pro­tec­tion.

By the lat­ter half of each year, we make our pre­dic­tions on the Color of the Year for the next year, and in­creas­ingly, we are con­sid­er­ing Chi­nese aes­thet­ics.

BLOOMBERG

An em­ployee works at Ak­zoNo­bel’s paint fac­tory in Ash­ing­ton, the United King­dom.

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