Business / CEO roundtable on new normal

Riding on the 'smart cities' plan in China

( Updated: 2015-03-13 13:58

Editor's note: With the annual sessions of the National People's Congress and the National Committee of the Chinese People's Political Consultative Conference ending with a call to adapt to "new normal", sat down with global business leaders to get their views on the reform process and lowering of the growth target.

Here are the excerpts of Dr. LIN Liangqi, President of AkzoNobel China and Managing Director of Decorative Paints China and North Asia of AkzoNobel.

Riding on the 'smart cities' plan in China

Dr. LIN Liangqi

What impressed you most about the annual Government Work Report released during the ongoing two sessions of China's top legislative and advisory bodies in Beijing? What do you think is the most important issue raised by the government in this report compared with the previous sessions?

We are impressed by the pragmatic and target-driven 2015 annual Government Work Report.

We are pleased to see that "smart cities" are included in the Government Work Report of the Premier. He said that "we will develop smart cities and protect historical and local culture." This is where AkzoNobel's Human Cities initiative comes into play.

Built around six main pillars – color, heritage, transport, education, sport and leisure, and sustainability – Human Cities highlights the key issues that cities around the world need to focus on in order to become more resilient and better equipped to cope with the challenges of the 21st century.

In China, the speed and magnitude of urbanization is significant, with 68 percent of the population – that's around a billion people – expected to live in cities by 2030.

AkzoNobel has long been helping communities worldwide to create better environments in which to live and work by providing innovative and sustainable solutions and products. Human Cities builds on these activities to establish a strong platform for us to positively influence the process of urban transformation that's taking place.

In the Government Work Report, Premier Li Keqiang said that the nation's economic growth rate would be adjusted to 7 percent. Do you think that your company should adjust its development strategy in China?

For AkzoNobel, China has always been an important strategic market in our global strategy and contribute to realize our global visions. 7% GDP growth is still one of the fastest growth rates among the global economies. China's mega trends are huge opportunities for AkzoNobel and we are committed to using our expertise and innovations to support China achieve success in its evolving urbanization process, whilst growing our businesses sustainably and responsibly.

As said, the speed and magnitude of urbanization is significant in China. Also, in a bid to improve people's livelihood and spur economic growth, China will begin construction of seven million apartments under the affordable housing program in 2015. In terms of consumption, it is estimated that the overall purchasing power parity (PPP) in China is expected to quadruple in the next 10 years. This will certainly result in great business opportunities in consumer-related sectors. As environmental concerns are growing among all parties in the country, solutions with better performance and sustainable features will be well-received by the local market and customers.

We are committed to continuing our investment momentum in China and providing our sustainable and competitive coatings and chemicals solutions to all four end-user segmentations, Buildings and Infrastructure, Transportation, Consumer Goods and Industrial.

Amid the global economic slowdown, especially in developed economies, and China's economic adjustment, what is your greatest concern about your company's operations in China?

The ability to keeping pulse of local market development and meeting changing customers/consumers' needs are top priorities of all international companies. The Chinese "new normal" will bring opportunities for all companies, but how to take the lead in capturing the market share with most competitive solutions, which are outstanding in both performance and sustainability features, will be key to future growth.

In a bid to provide tailor-made solutions for Chinese customers, we keep on reinforcing our local RD&I capabilities for innovation. In June, our new €6.5 million-investment development and application center in Shanghai will be put into use. Meanwhile, we are expanding our presence in China by establishing new production facilities in Shanghai, Changzhou, Ningbo, Guangzhou and Chengdu, etc., in order to provide close services to customers.

Also, in a bid to provide the most competitive coatings and chemicals solutions to customers, we are committed to pursuing operational excellence and reducing our business costs by all means. We believe, great support from central or local governments on regulatory support, such as reduction of transaction and business cost including tax, or employee retention policies for companies, which are leaders in sustainability, will be very welcomed.

Which aspect of China's social and economic reforms should be improved in order to enhance the investment environment to attract more foreign companies?

Just as same as all local residents, we are expecting to see improvement in our living environment, with clearer air and cleaner water around us. These are basic requirements that people can work and live in cities safely and happily, and for any company's sustainable growth in China. Of course, this requires everyone's efforts, from government regulations to people's way of living in every day.

Do you think your company will develop faster in China than the previous year in terms of growth rate or market penetration?

AkzoNobel launched a new strategy that focuses on end-user segments, operational excellence and sustainability and is summarized by the company's new vision: Leading market positions delivering leading performance. In China, we are carrying out the strategy in full swing, and pursuing a quality and sustainable growth, rather than just volume growth.

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