Shanghai — The Asian Pacific market is leading the world in innovation, a change from how things used to be, according to Wim Roels, CEO of Borouge Pte. Ltd., the marketing arm of Abu Dhabi-based materials firm Borouge.
“I think we are in a historical shift,” he said in an interview with Plastics News during Chinaplas in Shanghai. “Traditionally products were developed in Europe, produced in Europe [and the] Middle East and they're shipped into Asia, and [what] you find here are copies of what you find in Europe.”
He continued, “Now we see the opposite start to happen where we actually are introducing new products here, which are then going back into Europe.”
Roels said he has seen that happen in Borouge as Borouge's European parent company, Austria's Borealis AG, has expressed interest in products in the Asian market with the hopes of introducing them to a European market.
Asia is quickly becoming a global innovation driver, he said. “You see a kind of return of innovation where Asia becomes the trend setter, the driver, which is then flowing back into Europe. [This] is quite new for our industry, where it has been the other way around for many, many years.”
The news of China's economic slowdown hasn't changed his bullish view on Asian growth. “Everybody thinks it's slowing, but I think anybody in the rest of the world would be happy with 6.5 percent ‘slow' growth. In that respect, this sets the trend.”
He credited the Asian market as being more open to new things. “They are willing to explore things, they are willing to try out things, they have different requirements than Europe,” he said. “The speed of development, the speed of innovation is significantly higher, and I think that will drive this trend, that Asia will become also a trend setter when it comes to the innovation, to the product standards [and] product specification.”
The Asian market's role is changing in another way as well, he added, as Asia, European and Middle Eastern markets are increasingly linked in a way that the North American market and Asia market can never be.
“We have a kind of super continent which is Europe, Middle East, Asia, and they are logistically integrated. Which means that these markets affect each other,” he said. “If you have a slowdown in Asia it pushes material back into the Middle East, which will then flow into Europe, or the other way around. That's where also Middle East is playing part of this swing between supplying Europe, supplying Asia, sitting in the middle of the two. They have logistics capability. If you look to U.S., America is more difficult, it's more expensive, it's longer distance… That's why we have this kind of super region and it comes from a demand balancing, supply balancing point of view.”
Borouge's new innovation center, which opened in Abu Dhabi in November, is an important part of the company's shift towards Middle East and Asia for innovation, he said, in partnership with the application center based in Shanghai.
“I think it's something we are very committed to as a company, we have made significant investments in this kind of infrastructure and people.” He emphasized the importance of bringing in the right people. “I mean you can build plenty of facilities, but that doesn't mean anything is going to come out. Too often people believe you get innovation if you build a fancy R&D center.”
This is where Borouge is differentiating itself, he said. “Our innovation comes from understanding where you can add value somewhere in the society. It doesn't come from R&D. The time that people sit in their lab and make a great fantastic invention, this time is more or less over. It can happen, but the chance that it happens is very small, and if you would do that as investment, your return in investment will not be very big.
“Only by building up the whole chain you can really drive innovation and you can drive innovation successfully, not by building R&D centers. I mean it's a big investment, but it cannot survive on its own, it needs to be part of a network, it needs to be a part of an integrated approach towards innovation, going from customer down to R&D center,” he explained.
The Asian market is an example of this model of total chain innovation, he said. “We have the innovation center, but we at the same time have also established offices throughout Asia, brought sales people close to the customers, put marketing people into their different areas. There is a whole network of people driving this innovation.”
Alongside with innovation, however, Asia is known for being more volatile than other regions — a challenge for Borouge's short term decision making, Roels said. But he said the price instability has been normal for at least in the past five years. “Last year was back to normal, which means it's quite a bumpy ride, with good demand, but with fluctuating pricing. This year we see similar things where demand is basically okay, but the pricing is going up and down. That's not unusual for this business.”
Speed is especially important. “You need to be able to take the opportunity when it's there, that's really an important differentiator to be successful, is this ability to follow the market fast enough.”
Trying to get ahead of the game is an unrealistic expectation, he said. “It's triggered by things which are totally out of anybody's control. When Shell had their fire in Singapore, it took a big unit out overnight, so it had immediate effect on the prices. You cannot forecast these things, but you can react. It's partly forecasting, it's partly looking out and see what can have an impact on our business and then react and start to position early enough.”
Borouge's Abu Dhabi petrochemical plant is in the final stages of an expansion that started in 2014, he said, adding that the company is preparing to enter a new stage of its long range strategy.
“Now it's time to take a breath and stabilize. We need to first make sure that the foundation is solid enough for the next phase of growth,” he said. “In the intermediate phase we are still looking at growing capacity by debottlenecking, by expansions, smaller ones, by still adding significant amounts of volume…but really in the next big step it needs a strong foundation to build on.”
Roels said he sees one area where the Asia Pacific market needs to improve. “One of the key challenges for our industry and for the society we live in in Asia, is how we manage the end of life of all the products we make. That end of life, recycle, reuse type of thing, is something which I believe is really important for our industry, and it's something where we as an industry should take an active role,” he said. “This is something where I believe in Asia there is still quite a lot work to be done, in getting that engagement, that drive to work on that.”
