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Successful formulas for chemicals industry
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CHEMICALS play a major role in our lives even if we aren’t always aware of their presence in the paint on our walls, the ingredients in our cosmetics or the plastics that hold our takeaway food.
The chemicals industry worldwide has suffered from slower global growth and turmoil in crude oil markets. In China, revenue in the petrochemical industry fell 19.5 percent last year, according to the National Bureau of Statistics. Many companies are turning to specialty products to keep their bottom lines healthy.
Dutch-based pigment maker Akzonobel hasn’t improved its mainstay product all that much in recent years, but it chalked up 4 percent sales growth last year to 14.9 billion euros (US$16.7 billion), thanks largely to the popularity of its decorative paints.
China was the company’s second-largest market after the United States, accounting for 12 percent of sales and 6 percent of annual growth.
Lin Liangqi, president of China operations for Akzonobel, said in a recent interview that Akzonobel has enlarged its repainting market by encouraging customers to change the interior décor of their homes rather than seek to buy new premises. Last year, the company unveiled an app called Visualizer that enables people to “paint” their rooms in virtual reality to decide what colors best suit them.
The company recently opened a plant in Sichuan Province to serve the growing western Chinese market. Ruud Joosten, a member of Akzonobel’s executive committee responsible for decorative paint, told Shanghai Daily that China presents great potential in terms of people redecorating their homes.
In a sense, specialty chemical companies are playing to the emotions of the market.
Swiss-based specialty chemicals producer Clariant is now trying to portray itself as an insider rather than a foreign company seeking to make money in China. Management is taking pains to point how the company’s contributions to China’s personal-care market and green economy.
Driven by growing health awareness among Chinese consumers, Clariant upgraded its refining technology to produce non-silicon shampoo.
Jan Kreibaum, Clariant’s regional president for China, said “personal care is one of the largest business sectors in China” for the company.
To stress its energy-saving credentials, Clariant delivered a new catalyst for ammonia production, called AmoMax-10. It helps lower temperatures required for the synthesis of ammonia, thus reducing energy consumption.
“Assuming all ammonia production facilities in China applied AmoMax-10, we could save 1300 gigawatt-hours of energy annually,” the company noted, equating that with the electricity consumption of 170,000 households in China.
Ammonia is a key ingredient of agricultural fertilizers that power food production in China. Use of fertilizers here has grown 27 percent to 58.4 million tons since 2000.
Kreibaum said company investment in China will account for 40 percent of its global total in 2017. “Clariant is shifting its business development focus as a whole to China,” said Christian Kohlpaintner, designated chief executive for China, who lives in Shanghai.
In this city, Clariant is building a new central business “campus” to integrate marketing, research and development, and sales. Construction is scheduled to be finished by the end of 2018.
Instead of transferring existing technologies to China, Kohlpaintner said, the company is now doing research and development here, based on local market dynamics.
For Kraton, a US-based polymer manufacturer, the Chinese market now accounts for about a fifth of its global revenue. The company is trying to persuade Chinese medical manufacturers to use hydrogenated styrene block copolymers as an alternative to polyvinyl chloride (PVC) products.
Li Xiang, Kraton’s sales manager, said the material has better performance and is ecologically more viable.
Alice Ji, now a staff member of DowDupont’s supply chain department, who majored in chemistry at Shanghai Jiao Tong University, said she gave up looking for jobs in pure science research after graduation.
“My friends and I couldn’t see much future in pure innovation,” she said. “What we recognized is that product adaptations are powering the market and that gives us the chance to enhance our business skills.”
In Ji’s sophomore year, she participated in a campaign organized by Akzonobel to design a poster on the topic of “finding colors in daily life.” The winners were given internships. It made her realize how the future of the chemical industry is shifting to creative marketing and product adaptation.
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