Jeremy Rowe: In 2015, 27 percent of AkzoNobel’s revenue came from Asia Pacific, the second largest market next to Mature Europe (36 percent). And the demand for decorative paints in this region will continue to grow the next few years as infrastructure developments continue to fuel the countries. In Q2 in AkzoNobel’s decorative paints area, positive developments in Asia contributed to an increase in volumes and also drove an improvement in EBIT which was up 2 percent.
As global trends such as population growth, urbanization, climate change and lack of natural resources are also rapidly changing the region, and there is a high demand and potential for coatings technology to improve urban living. These come in the form of sustainable, clean, energy-efficient, and productive solutions for tall commercial and residential buildings, hospitals and schools.
To better serve the trade professionals in South East & South Asia, Middle East, we decided to consolidate our coatings portfolio through the launch of Dulux Professional for the projects market.
CW: What specific investments and initiatives is your company making in this region?
Rowe: This year, we launched Dulux Professional in Vietnam, Indonesia, Malaysia and Singapore. Plans are in place to launch it in other Asian markets. Dulux Professional is a one-stop paints and coatings solution for trade professionals such as developers, architects, and interior designers, with a focus on education, residential, leisure, commercial, healthcare, infrastructure, industrial and repainting sectors.
AkzoNobel is equipped with an extensive knowledge of sector specifications and regulations around the region. And with the newly integrated Dulux Professional platform, customers across markets can now tap on this shared knowledge for an optimum customized solution.
CW: What specific products are you launching for the Asia region?
Rowe: Dulux Weathershield Powerflexx, which was launched across South East Asia in 2015, was designed specifically for the region’s tropical climates.
It uses state-of-the-art Powerflexx technology to protect exterior walls against hairline cracks besides being able to stay clean longer by resisting dirt and stains. Formulated with special pigments, the premium paint deflects UV rays, keeping the heat out from your home and your electricity bill low.
CW: What are the key end-user markets for Asia?
Rowe: While all end-user segments are active in Asia, we are seeing great activity in the Buildings and Infrastructure, as well as and Transportation segments.
CW: How is AkzoNobel meeting the unique challenges of the Asia market?
Rowe: Sustainable practices and improvements will continue to take precedence in the company’s growth strategy. Our strategy’s sustainability focus areas include:
• Sustainable business: Creating business value through products and solutions that provide both functionality and other sustainability benefits, as well as cost savings from operational efficiencies. Target: To have 20 percent of AkzoNobel’s revenue to come from eco-premium solutions, which are products that have an environmental advantage over competitor products, by 2020. We reached 19 percent in 2015.
• Resource efficiency: Accelerating material and energy efficiency across the value chain. Target: 25-30 percent reduction in cradle-to-grave carbon footprint per ton of sales from 2012 to 2020.
• Capable, engaged people: Engaging our people and partnering with our suppliers and customers to deliver significant changes.
CW: Does AkzoNobel have plans for future investments in Asia in 2017 and beyond?
Rowe: As economic growth rates in Asia remain above other regions, AkzoNobel will concentrate on improving its research, development, and innovation facilities to meet the markets’ demands sustainably.
This is done in tandem with the company’s global Human Cities initiative to improving, energizing and regenerating urban communities across Asia and the world. Around 50 percent of the world’s population currently lives in cities, and this is expected to increase to nearly 70 percent by 2020. And one of the biggest challenges of our age will be how to keep our cities “human.” As neighborhoods, villages and towns meld into megacities, we hope our Human Cities projects will help preserve our sense of home, identity and happiness.
CW: Please discuss some of the Human Cities projects that have been completed in Asia.
Rowe: AkzoNobel has played a vital role in preserving iconic cultural sites in Southeast Asia. Historical icons in UNESCO World Heritage sites such as the Bandstand and Burkill Hall in Singapore Botanic Gardens, as well as the Stadthuys in Malacca (Malaysia) are being refurbished by AkzoNobel paints and coatings. The historic Kota Tua (old town) area of Jakarta in Indonesia, will also be restored by AkzoNobel in hopes of securing a UNESCO World Heritage status for the site.
Other similar projects announced this year includes coating a bridge that connects two villages in the District of Panimbang, Banten Province, Indonesia.
Given that 60 percent of our products are in the Buildings and Infrastructure, and Transportation end-user segments, we believe that we have an important role to play in Asia’s urban transformation. We want to go beyond the purely functional aspects and help cities and their citizens to connect on an emotional level.
AkzoNobel opens new Decorative Paints site in Western China
• AkzoNobel has started production at its fourth – and largest – plant for decorative paints in China. Located in Chengdu, the new facility represents an important milestone in the company’s growth plans for the west of the country. The new plant is part of an investment in excess of €50 million to build manufacturing facilities for both Powder Coatings and Decorative Paints.
• All products produced will be waterborne and solvent-free, and the facility’s manufacturing environment will generate lower carbon emissions and be more sustainable.
• AkzoNobel’s Decorative Paints sales have grown significantly in Western China. In 2015, the sales volume in the region constituted around one quarter of its overall market revenue in China. Contributing to the sales growth is the increasing demand for its re-painting services, as well as its eco-friendly products and product solutions to the region’s real estate development.
• AkzoNobel now has four decorative paints production plants in China. Its other sites in Guangzhou, Shanghai and Langfang cover the southern, eastern and northern regions of the country, respectively. AkzoNobel employs around 7,500 people in China and generated €1.8 billion in locally driven revenues in 2015.
AkzoNobel opens its largest technology center in China
• AkzoNobel recently inaugurated its new €6.5 million technology center in Songjiang, Shanghai. The company’s largest research facility in China, it will support product innovation and the development of next-generation paints, coatings and specialty chemicals.
• The majority of the products supported by the new facility will be waterborne and powder-based, in line with the company’s ambitions to develop more eco-premium solutions.
• AkzoNobel employs over 7,500 people in China (including 500 in RD&I), while revenue in China totaled €1.8 billion in 2015. The company operates more than 30 production sites across the country, with RD&I resources allocated to 26 of them to support local customers.