Evonik's specialty chemical products follow demand west

German specialty chemicals producer Evonik Industries AG will strengthen development in western China to better cater to demands of local clients.

Claas-Jurgen Klasen, president of Evonik Greater China Region, said that the company will focus on expanding sales in Sichuan, Chongqing, Shaanxi and Guangxi Zhuang autonomous region to seize business opportunities.

"We see significant growth potential in western China because of the vast markets and government incentive policies," Klasen said. "The power of development in those regions is amazing. We would like to participate in this development."

In the first half of 2016, Chongqing reported 10.6 percent year-on-year GDP growth, with Sichuan growing at 7.5 percent, Shaanxi at 7.2 percent and Guangxi at 7.2 percent, all higher than the national average of 6.7 percent.

The company has implemented the Go West strategy since 2013. Income from western China accounted for 5 percent of overall sales in China in 2015, increasing significantly from previous years, according to the company. The total sales revenue of Evonik in Greater China was 1.3 billion euros ($1.4 billion) in 2015.

"It was a very good decision to move early into the western regions because we see an attractive growth rate," said Klasen. "By 2020, we want to achieve 10 percent of our total sales in China in western China."

So far, Evonik has a sales office with 20 staff members in Chengdu, capital city of Sichuan province. The company has yet to establish production or research and development bases in western China.

"It is our mission to support the growth of our local clients," said Klasen. "The advantage of specialty chemicals is that they could be widely applied in various industries, but only a small amount is needed in a specific product. The convenient logistics network in China guarantees we can provide premium products to clients in western regions in the most efficient and effective manner."

The company, which is the owner of many patents in specialty chemicals, provides customized products to local clients to better serve real market needs.

"These (customized products) are necessary because the needs of Chinese customers are not necessarily the same as those of customers in other countries," Klasen said. "You have to find customers' true demand.

"In Chemistry almost all molecules are already developed. Therefore the innovation comes in most cases with applications. Above all it is not a technology push, but a market pull, especially in China," Klasen added.

Evonik's multinational background and ample cross-industry support experience ensure it can react to client demand quickly and effectively.

"One of our competitive advantages is our broad background so we can use synergy from one industry to another industry. Problems which have been solved for the pharmaceutical industry can be useful in other industries as well. We can build links," Klasen said.

Klasen said the company plans to pay more attention to the automotive and construction industries in the western region. The company is capable of providing over 30 different products used in construction of a vehicle, including products for tires and steering wheels.

Evonik is also keen to explore opportunities in energy conservation and environmental protection as Chinese governments are paying more attention to related areas.

Evonik has been striving to enhance brand awareness in western China in recent years.

It had the largest ever booth at the Western China International Fair, held in Chengdu from Nov 3 to 6 last year, to demonstrate its latest mobility products and sustainable development solutions.

Looking ahead, Evonik will continue to promote the concept of innovation via its local sales force.

"Our sales force knows about market and customer demands. They also need to have the technical capability to coordinate our internal resources to work out the solutions and present them to the customers."

The company also plans to work more closely with customers to conduct joint product development in the western region.

Long-term links

Evonik Industries AG, a creative industrial group from Germany, is one of the world leaders in specialty chemicals and has a presence in over 100 countries and regions around the world.

Its activities focus on the key megatrends in health, nutrition, resource efficiency and globalization.

The company is making a name for itself through its strong research and development capacity. After increasing its R&D expenditure by an average of 6 percent per year since 2010, its R&D costs totaled 434 million euros ($458 million) in 2015.

Evonik reported 13.5 billion euros in global sales and an operating profit of 2.47 billion euros in 2015.

The company expects its sales revenue to be slightly below 13.5 billion euros this year, due to considerable declines in prices, especially in the nutrition, care and performance materials segments, which has led to the forecast of a slight reduction, according to Evonik.

Thanks to its strong market positions, balanced portfolio and concentration on high growth businesses, the company assumes there will be continued high demand for its products

Evonik Industries has been producing specialty chemical products in China since the late 1970s, with wide-ranging trade relations already in place in the region before that time.

As Evonik regards China as one of the driving forces of the global economy, the company now has around 3,000 employees in China, and its regional sales reached over 1.3 billion euros in 2015.

(China Daily 01/06/2017 page14)