Henkel Continues to Emphasize China's Adhesives Market    
-- Interview with Mr. Jan-Dirk Auris, Regional President of Henkel Asia Pacific

1. How is the global environment for adhesives? Is the global economic slowdown having a negative impact on growth? What is the current size of the market?

A: Like a number of industries, the global adhesives market was not immune to the economic challenges in 2009. Some segments of the market have seen a decline or flattening compared to 2008. But there are a number of bright spots as well. For example, in markets such as China, government stimulus has fueled investment in transportation, a sector that is continuing to grow. Furthermore, if we look at long-term indicators in the business, there is still a number of growth opportunities, particularly in emerging markets, such as China, India and Thailand. With rising affluence and spending on consumer goods, as well as infrastructure development, these factors will continue to drive growth for the adhesives industry.


2. What are the most important markets for the adhesives business globally? Where do Asia and China in particular, stand in relation to the rest of the world?

A: North America and Europe have always been the frontier in terms of the use of adhesives. Japan and Korea are quite innovative in the adhesives market in the Asia Pacific region. However, the Chinese market with all its local champions has already reached a leading position in terms of technologies. China is one of the most important markets for Henkel, one of the strongest players in the adhesives industry due to its strong manufacturing base, consumer consumption as well as innovative design and industries such as automotive. We also see great opportunities in markets such as India and Indonesia.
    If we compare regions, each has different specializations in terms of adhesives use. For example, Europe is strong in Aqueous Polyurethane Adhesives as well as Non-solvent Adhesives. Meanwhile, the US is very focused on advanced Reactive Hot-melt Adhesives; and Asia Pacific has put in a lot of R&D efforts into Adhesives for cars, phones, books, refrigerators and fast moving consumer goods.


3. What are the unique characteristics of the Chinese adhesives market compared to other markets?

A: Compared to Europe or North America, the Chinese adhesives industry is relatively young. China's adhesives market is very innovative and dynamic. We are seeing significant growth opportunities and have found that our business is uniquely positioned in the industry to serve customers in high growth segments, such as the Flexible-Packaging Industry, the automotive industry (structural bonding, NVH solution - Noise Vibration Harshness, as well as alternative energy (e.g. wind-power, hybrid, solar energy).


4. What are some of the key trends driving change in the market? (green/safety regulation, integration at lower end of the production chain, M&A etc)

A: Environmental protection and safety continue to be areas of strong focus for us. While some companies may scale back such efforts during tough economic times, we like to keep focused on the long-term. At Henkel, we have made significant investments in developing "environmentally responsible" adhesives, which are less toxic and safer for the environment. Among the latest developments are the phosphate-free technologies for metal pre-treatment for the automotive industry or halogen-free adhesives used primarily in handheld electronics such as cell phones, PDAs ore notebooks. Henkel is consistently recognized as one of the most innovative and sustainable businesses in its home country, Germany. It is part of our core values as a company since it was founded in 1876, and we will continue to innovate and drive sustainability across our business.
    In regards to the global economic downturn, while it brings challenges to any business, we also believe that in the adhesives market, it will provide significant opportunities for Henkel over the long term. Many of our competitors are niche players, less diversified, and therefore more exposed in categories directly affected by the crisis. We believe that Henkel is very well positioned in such an environment. With our acquisition of the Electronics and Materials Business of National Starch, we further strengthened our global position in the industrial segment. This addition strongly compliments the existing Henkel Adhesive Technologies portfolio, and diversifies our offering and overall value proposition for customers. As a result, we believe that we are well positioned to continue to grow our overall share in the adhesives market, by serving and supporting our customers to grow.


5. How important is the adhesives business to Henkel in the overall portfolio in China? Do you think the global economic slowdown has or will have an impact on Henkel's adhesives business in China?

A: China is one of the most important countries in Henkel's Asia Pacific portfolio. Adhesives segment is a key pillar of the business - with automotive and packaging manufacturers among its many customers. In addition to having multiple factories in China, Henkel also hosts one of its five global R&D centers in China, developing products specifically for China and the rest of the world.
    Despite the global economic slowdown, the fundamentals in China remain unchanged. In fact, Henkel see the crisis more as an opportunity. Under the current circumstances, more and more companies are facing pressure to save costs. Henkel is committed to developing the adhesives products in a way to help customers achieve their specific goals. This means that in addition to providing adhesive products, we also provide consultancy, leveraging deep industry sector expertise, allowing us to advise customers on ways to speed time to market while reducing costs and in some cases developing better products.  For example, we can advise on ways that adhesives can be used to reduce the volume of raw materials used to develop a car, while also increasing the integrity of the chassis - this can lead to a more sustainable product, lower total manufacturing costs, and ultimately, a better car.   This added-value of service allows us to build a stronger "bond" with our customers - and has been particularly well received in China.
    Our outlook and commitment to China has never been stronger. And we believe that this market will continue to be a driving force for our global business in the years to come.  


6. What is the background for Henkel in development of crash resistant adhesives?

A: Henkel is an innovative company and has always been committed to providing the most advanced technologies to customers. Customer focus is key for the company to succeed in the business. Take the automotive sector for example; Henkel has its own design centers. For example, Henkel helps its customers - such as automotive manufacturers --design safer cars to meet specific safety standard requirements. For decades, car manufacturers have faced the challenge of finding adhesives strong enough to withstand extreme crash conditions without rupturing the adhesive bond. Henkel has invested significantly in R&D to help address and solve this problem for the industry. Lab test results show that the range of structural adhesives developed by Henkel can be used under the most extreme crash conditions, without rupturing the bond. This leads to a safer car, ultimately helping to save lives.


7. What are the unique benefits Henkel provides compared to other adhesives products?

A:
Better Crash Performance  

Adhesives play an important role in reinforcing welds in car bodies. Conventional adhesives ca