German additive manufacturer Henkel AG & Co. opened its Dragon plant in Shanghai less than two years ago, and Christian Kirsten, senior vice president of adhesive technologies, says the company is continuing to invest in Asia.
The Düsseldorf-based company touts the Shanghai factory as the world's largest adhesives plant. The company has been active in the Asia Pacific region for more than 60 years, Kirsten said, in an email interview with Plastics News. The company counts the region as one of its most important global markets, and China is Henkel's second-largest single market for adhesives.
Kirsten said the Dragon plant plays an important role in Henkel's growth in China and the Asia-Pacific.
“We have confidence in China's medium-to-high economic growth, hence [we are] continuing our investment to increase R&D strength and production capacity in China,” he said.
The company has invested more than 50 million euros ($55 million) in the 150,124-square-meter (1.6 million-square-foot) plant since 2010.
The plant has annual capacity to produce 428,000 metric tons of products.
This could be a challenging year for Henkel and other companies around the world, said Kirsten, but the company is well positioned to take advantage of the opportunities in the region.
“We expect the global economy to register only moderate growth in 2015,” he said, but “the emerging markets will once again achieve comparatively strong economic growth of approximately 4 percent in 2015, and the expected economic increase is around 6 percent in Asia (excluding Japan).”
“Per capita usage of adhesives in Asia is six times lower than in developed countries in North America and Europe,” he said. “The market for adhesives in Asia remains largely untapped but will continue to grow exponentially, posing a great development opportunity.” Shanghai's Dragon plant and Indonesia's plant expansions at the Tangerang and Pasuruan plants are evidence of the company's interest and belief in the region's potential, he said.
“That's why we are rooted here: to closely monitor and identify megatrends, so we can capture the fast-transforming market opportunities,” Kirsten said.
The region reported 732 million euros ($805.9 million) in sales in the first quarter of 2015 and grew by 5.9 percent compared to the same quarter in 2014, said Kirsten, “driven especially by very strong growth in China and double-digit growth in Indonesia.”
Henkel adhesive technologies reported 2.16 billion euros ($2.3 billion) in sales globally, and recorded sales growth of 3.3 percent. He added: “We had a good start in 2015 and we are confident in the Asia Pacific market.”
Kirsten said that the company has ambitious targets for next year: 20 billion euros ($22 billion) in sales, with half of that coming from emerging markets, particularly Asia-Pacific.
“The entire team is fully focused on executing our strategic plan,” he said, adding that 3-5 percent sales growth is well within the range for adhesive technologies.
R&D is a crucial part of Henkel's adhesives technologies business strategy going forward. According to Kirsten, 30 percent of Henkel adhesive technologies' 2014 sales were driven from products launched within the last five years and up to 80 percent of the technologies developed in the Asia-Pacific region are new patents.
In particular, mobile communications “has led to faster and more continuous adhesive consumption increase in China and Asia-Pacific markets than in mature markets,” said Kirsten. In 2013 Henkel opened a Henkel display center in Shanghai focused on handheld devices, screens and display technologies and an innovation center in Pune, India. Last year it opened a technical center in Seoul to work on development of lamination adhesives for mobile device industry.
Transportation, specifically high speed trains and lightweight vehicles, are another market opportunity. Kirsten, who also is senior vice president of transport & metal for Henkel, said that while filling both roles is a challenge (he's on the road more than 200 days a year), the two roles can benefit each other.
“When the synergies come into play, the reward and satisfaction is doubled as well, or even more,” he said.
