Germany's RKW sees Asia as its 'next big growth'

By Steve Toloken
Staff Reporter / Asia Bureau Chief

Published: June 24, 2014 11:42 am ET
Updated: June 24, 2014 11:51 am ET

Image By: RKW Machine maintenance at RKS's facility in Vietnam. The German plastics film manufacturer is looking to expand its presence in Asia.

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Topics Packaging, Film & Sheet, Extrusion, China, Asia

SHANGHAI — Most of the capacity growth for large German plastic film manufacturer RKW since 2010 has come from a push into global markets, particularly in North America and North Africa. Now, with its first Chinese plant opening by the end of the year, executives believe Asia will join that mix.

It’s been active in the region lately. In April the Frankenthal, Germany-based firm announced a $30 million investment in the southern Chinese city of Guangzhou. In March it revealed it had bought out its local partner in its operation in Vietnam, RKW-Lotus.

At the Chinaplas trade fair in late April in Shanghai, Plastics News caught up with Matthias Kaufmann, a member of RKW’s executive board and vice president of consumer packaging, and Oliver Dirmeier, who became managing director of RKW-Lotus and Asia sales director in January.

Kaufmann said the Asian investments are at an early stage, but he noted that most of RKW’s recent volume growth, from 300,000 metric tons production globally in 2010 to 370,000 tonnes last year, has happened outside its traditional European base, where most of its factories are located.

In 2011 it bought Danafilms Inc. in the United States and opened a facility in Cairo, Egypt, a $30 million investment. The company is one of Europe’s largest plastic film extruders.

Image By: RKW Matthias Kaufmann

“The majority of this growth stems from the Middle East and North Africa, from North America, and from Vietnam,” he said. “The next big growth in terms of where we are investing at the moment will come from Asia.”

“In addition to North America, we see our strongest growth in the next couple of years in Asia,” said Dirmeier.

Still, the company is taking a cautious approach — Kaufmann described it as a “rather conservative Germany company” — analyzing industries and countries and trying to find niches, like personal care films or secondary packaging for the beverage industry.

“We are really at the early stage of our Asian development, so therefore we go rather step by step,” he said. “It’s more targeting industries and then look where we have to be in order to be successful.”

RKW nearly doubled its capacity in Vietnam in the last three years, to 29,000 metric tons.

The Ho Chi Minh City factory is Vietnam’s biggest exporter of plastic film products, with more than 90 percent of its production sent abroad, mainly to Europe, he said.

The new China investment is a different story.

It will be located on the Guangzhou campus of RKW’s sister company, Renolit AG, and is planned to focus on markets in China and elsewhere in Asia, Kaufmann said.

“The Chinese operation is first of all for personal care — it’s become a market in countries only where you create enough money that people are looking for these products,” said Dirmeier. “In very poor countries, nobody is buying this kind of product. There is big, big growth for us if China is able to create a middle class or at least a certain income level.”

As well, RKW is targeting the Asian consumer packaging industry generally, including being a supplier to major household product and beverage industry brand owners, he said.

“This offers an attractive business development opportunity for us, which we aim to exploit with increased business activities in Asia,” Dirmeier said.

Image By: RKW A production line worker at RKW's Vietnam factory. RKW plans to target the personal care market in its expansion.

Asia is currently a little less than 10 percent of RKW’s 2013 global sales of 870 million euros ($1.18 billion). Kaufmann declined to specify sales targets for Asia but said the numbers will grow.

In a March news release, RKW said it bought out its Vietnamese partner, Nguyen Khue, in mid-2013, but noted that Khue, managing director of RKW-Lotus since it started in 2004, would remain a non-executive board member and adviser to the Vietnam operation.

Khue also is managing an unrelated German company, Lotus Packaging, RKW said.

“It was Mr. Khue who wanted to focus more on his own business opportunities, rather than our request or wish to gain more control because we already had a majority in that business, from the very beginning,” Kaufmann said.

RKW frequently has local partners when entering a new market, he said.

“We believe this really was a good strategy to grow a business and we are open to do that again with other partners or with our old partners,” Kaufmann said.

RKW’s investments in Asia mirror some larger trends, such as an increasing focus on multinational companies investing in China for the Chinese market, while looking at other places, like Vietnam, as new export bases.

“In order to realize additional cost saving potential, we see some companies moving their production from China to countries such as to Vietnam or other Asian countries,” Dirmeier said.


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Germany's RKW sees Asia as its 'next big growth'

By Steve Toloken
Staff Reporter / Asia Bureau Chief

Published: June 24, 2014 11:42 am ET
Updated: June 24, 2014 11:51 am ET

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