With the export market in China shrinking, Clariant (China) Ltd. has felt a squeeze on its business in China. To counter the effect, Clariant is focusing on getting to know its domestic Chinese customers better offering environmentally friendly products and exploring new markets as it goes.
We have to get out there and talk to customers, said Hugo Wu, regional head for Greater China in Clariant's pigments and additives division. It's really basic work, but it's needed.
Among the products showcased at Chinaplas 2009 in Guangzhou was a line of halogen-free flame retardants for the consumer electronics industry, products intended to help ease consumer concerns about safety and the environment.
Hong Kong-based Clariant (China) Ltd. was hit hard in the financial crisis. In the first quarter of 2009, the company posted a 7.4 percent decline in sales. In its pigments and additives division, sales declined by 38 percent during this period, while its masterbatches division sales were down 24 percent.
We're going through a period of really weak demand, Wu said in an interview at Chinaplas. Some of our major problems are coming from the electronics industry.
The firm has drawn down capacity in Asia and elsewhere around the globe, although officials are doing their best to avoid layoffs. We haven't stopped production, Wu said. But we have introduced shortened working days.
Wu blames the severe impact of the crisis on Clariant on a focus on exports. In the future, he says the company will balance itself better, paying more attention to domestic Chinese brands, particularly when it comes to food packaging. To help the company refocus, Wu said it will examine what domestic Chinese brands want. Close to the market, close to the customer, he said. It's the only way we can really know where we can grow.
While Clariant's pigments unit provides color to Coca-Cola Co. in the United States, for example, it hasn't paid enough attention to Coke's Chinese competitor, Wahaha. Of course, they're not our direct client, he said. But we should understand the entire production chain.
Juergen Heise, head of Greater China for Clariant (China) Ltd., said the growing emphasis on domestic companies has been coming for a long time. With or without the crisis, the trend would come anyway, Heise said. Now, we are looking to expand in different areas and different provinces.