Paint maker sees bright prospects

Norwegian Company Jotun enjoys success accessing Chinese market

Zhangjiagang's favorable conditions make it an ideal canvas for an international paint company to brush up its main China operations.

That's why Norway's Jotun Coatings (Zhangjiagang) Co Ltd recently invested 70 million yuan ($11 million) in its plant in the city, which it established a decade ago, operations director Paul Nelson said.

"For us, it has been a success," he said.

"There's a lot of discussion now about our strategy going forward, about the volumes of paint needed in China in the future. Zhangjiagang is important to that. We're a very successful part of the Jotun global operation China clearly is a huge part of the global operation."

Jotun produces 3.5 million liters of protective coatings a month, ranking No 1 in China by volume, Nelson said.

Most of its business is in marine and protective coatings. Decorative and powder coatings are still small, but they are growing fast.

Despite a slowdown in growth in the second half of this year, rolling 12-month production volumes are already 10 percent over this time last year.

"Clearly, to achieve this goal, we have had to invest," Nelson said.

"But a lot of that investment has been to improve efficiency, not just buying new equipment."

The economic slowdown notwithstanding, that success makes the company optimistic.

"We still predict continuous growth in the coming years," Nelson said.

Zhangjiagang also hosts the company's R&D center in China.

The center employs about 70 chemists, who conduct R&D for the local and global markets.

"We have very, very talented people, who are very qualified," Nelson said.

"It's cost-effective to do global R&D here."

The Zhangjiagang site employs 510 of Jotun's 1,700 employees in China.

"We see a very healthy future for this site in Zhangjiagang. We certainly aim to keep the investment going. We get very good support from the local government, which is very efficient."

Jotun, in turn, is Zhangjiagang's largest single contributor of tax revenue, Nelson said.

Local tax units are measured by area - and the plant's is the largest in the city.

"When the tax authorities come, they always have big smiles on their faces," Nelson said.

But Jotun enjoys advantages in Zhangjiagang beyond government support, he said.

"As a chemical company in a chemical area, there are lots of local suppliers we can use. And the infrastructure is very good here," Nelson said.

The city is about 90 minutes' drive from Shanghai, where Jotun's finance and sales departments are located.

And there are many companies nearby from which it can source materials.

About 10 to 15 percent of its materials are imported.

The proximity not only to Zhangjiagang's port but also to its port authority and Customs is helpful, Nelson said.

"We can get in the car for a face-to-face meeting in five minutes.

"I think in the future, Zhangjiagang will be even better because they're building a high-speed railway."

The line will connect to Shanghai.

"I think that will have a hugely positive impact on the area."

(China Daily European Weekly 10/22/2015 page15)