Akzo Nobel Strengthens Presence in Coatings and Chemicals Businesses   

By Lily Wang   

Over the last few years, Akzo Nobel has been very active in China. Akzo Nobel announced a Euro 250 million investment for a new chemicals multi-site in Ningbo, and the company has also opened new coatings facilities in Suzhou, Langfang, Tianjin and Jiaxing, bringing the total number of plants to 22 and the number of employees to almost 5 000.
   Akzo Nobel China reported revenues of US$750 million in 2005, rising to US$887 million in 2006, representing an impressive growth rate of 18%. The group has set a revenue target for China being US$2 billion by 2012 not taking into account large acquisitions like ICI. Akzo Nobel's priority now is to conclude the acquisition of ICI and to guide the company through a smooth integration process.

Acquisition of ICI
Akzo Nobel - the world's number one coatings player, is not the leading coatings supplier in China now. With the acquisition of ICI - focusing on decorative coatings and packaging coatings worldwide - topping the second and creating a respectable brand of Dulux in Chinese decorative market, there is a considerable amount of work being undertaken currently in relation to the integration of the two businesses, including brand and other considerations. Akzo Nobel's approach to the pending integration of the two companies is to combine the best from both, and this principle is absolutely central to the way in which the integrated company will be managed, and the way in which it will be operated over the coming years. By doing so, Akzo Nobel will create an even stronger platform for accelerating growth in China.
   "Akzo Nobel intends to retain key ICI management and create a unique industrial brand," expressed Mr. Leif Darner, the Akzo Nobel Board Member responsible for Chemicals, at the press briefing in Beijing on November 22nd, 2007, "The pending acquisition of ICI will significantly strengthen the presence of Akzo Nobel in the Chinese and Asian Pacific decorative coatings markets. More importantly, the acquisition will also strengthen Akzo Nobel's product and service offering to the benefit of Chinese and regional consumers."

Sustainable development
A key element of Akzo Nobel's continuing expansion in China is the company's commitment to sustainability. Akzo Nobel has gone to great lengths to ensure that all its facilities meet high safety and environmental standards. These are global standards. The company is also working towards a 100% sustainable product portfolio in terms of eco-efficiency.
   Akzo Nobel has taken significant steps to make this happen. For instance, it has identified eco-efficiency KPIs (key performance indicators) in its operation - e.g. CO2 emissions, VOC emissions, hazardous waste, fresh water consumption. With this mechanism in place, the company's plants in China, and globally, are able to measure and drive advances in sustainability.  

Ningbo multi-site
Akzo Nobel will build multi-site at Ningbo to produce ethylene amines and chelating agents, requiring Euro 250 million. The chelates plant is expected to start up in 2009, followed by the ethylene amines plant in early 2010. In addition, the company also plans to build an organic peroxides plant and cellulosic specialties facility at Ninbo site.
   Akzo Nobel has strong ambitions for its chemical business in China and the broader Asian Pacific Region, and expects 20% of revenues to originate from the Asia Pacific region by 2012.

Coatings innovations
Akzo Nobel is constantly introducing new coatings innovations in China and elsewhere. For example, corrugated steel is one of the most commonly used roofing materials in China. However, one of its main drawbacks is that dirt accumulates easily in the grooves. To address this issue a silicon based self-cleaning coating has been developed by Akzo Nobel's Industrial Finishes business which uses water to release dirt particles and remove them from corrugated roofs.

Management in China
Commenting the differences between managing the subsidiaries in China and outside China, Mr. Leif Darner said, "It is very exciting to work with our Chinese business as China is enjoying fast and prosperous growth in most segments, the drive and motivation for people to succeed is very high. Perhaps some of that eagerness has slowed down in more mature markets. With the rapid growth comes also the competition for talent and it is easy and tempting to look for better opportunities. It will probably take some time to build up a stronger company loyalty in a fast growing environment. Akzo Nobel is doing its utmost to gain that trust by operating with integrity and responsibility and conduct our business in an environmentally and socially beneficial way."