Creativity and Self-renewal Drive Sustainable Development
Year:2017 ISSUE:18
COLUMN:ECONOMY AND BUSINESS
Click:316    DateTime:Nov.30,2017
Creativity and Self-renewal Drive Sustainable Development

Evonik Industries is celebrating its 10th anniversary in September this year. Over the past 10 years, Evonik has transformed itself from a mixed-portfolio corporation to a pure-play specialty chemicals company. Evonik’s history can be traced back to the beginning of German industrialization in the first half of the 19th century. Creativity, specialization, self-renewal and reliability form an important part of its tradition, and are also the secret of its longevity. The company’s creativity isn’t just reflected in its products: Evonik’s Executive Board recently made the decision to realign the regional strategy, with the former regions of Greater China, Japan, and Korea now jointly forming the Asia Pacific North (APN) region. What does this new structure mean to Evonik? What new business models will bring the power of change to Evonik? How should the prospects of the Chinese market be viewed? Dr. Claas-Jürgen Klasen, Regional President Asia Pacific North of Evonik Industries recently agreed to an exclusive interview with the Chinese version of our magazine (China Chemical News).


Optimize portfolio and identify the focus of resource allocation

Evonik is a world leader in specialty chemicals. Prowess in innovation and efficient R&D drive profitable and sustainable growth for Evonik. The company has increased R&D expenditure by an average of 4% per year since 2011. In 2016, it totaled €438 million. Networking and the internationalization of research, as well as forward-thinking and openness to external ideas, have helped build Evonik into a best-in-class specialty chemicals company. “We aim to achieve profitable growth by making Evonik’s portfolio more specialized and more balanced, strengthening its innovative prowess and driving a performance-oriented corporate culture,” Klasen told the reporter.
Evonik has identified and defined four strategic growth engines within its portfolio as the driving force for more balanced and more specialized growth. They are: Specialty Additives, Animal Nutrition, Smart Materials, and Health & Care. “In these growth engines we already have strong leadership positions and we will strengthen them further. These will be the focus of capital allocation,” Klasen said. Evonik has invested tens of millions of euros in the construction of its new specialty silicone production facilities in Shanghai, China. The plant is yet another important cornerstone in its growth strategy. Evonik hopes to expand its specialty silicones production capacity in Asia to cater to rising demand in localized production. “Organically modified specialty silicones form part of specialty additives. This is one of four core growth fields in which we see above-average potential for growth and margins,” Klasen further explained.
Evonik aims to optimize its portfolio through acquisition. The company recently completed two major acquisitions: US$630 million to buy J.M. Huber's silica business, and US$3.8 billion for US company Air Products’ specialty additives. Klasen believed that through the acquisition of Air Products’ specialty additives business, the company took an important step in the strategic development of its portfolio. The successful acquisition of US company J.M. Huber Corporation’s silica business will enable the company to expand its presence in Asian and North American markets, especially in the consumer goods industry.

Transformation to inspire the power to change

Evonik puts a stronger focus on businesses with a clear specialty chemicals character.  As a chemical company with a long history, Evonik continues to think of how to stimulate the power of change.
Evonik is now represented in all important markets, in many places as a market leader. To strengthen its international presence, the company’s Executive Board recently decided to realign its regional strategy. The new structure makes Evonik more flexible - but above all, it also makes Evonik more international. The former regions of Greater China, Japan, and Korea now jointly form the APN region, and Dr. Claas-Jürgen Klasen is heading this new region. “I am confident that with this new regional setup, we will be able to explore more synergies in growing the business in the APN countries, and also offer our customers more innovative products and solutions tailored to local needs,” said Klasen about the new setup.
Digitalization is affecting every area of traditional sectors. Evonik is exploring the infinite possibilities of digitization, and so has established an in-house organizational unit to develop a digitalization strategy tailored to the company’s needs. By 2020, the company will invest €100 million in this area. It’s not just about data and technology, but especially about new business models, solutions, services for customers, and training qualified staff. Broadly speaking, the business model involves trends, new technologies, business models, needs of customers, new models for networking and cooperation, the demands of working life, and so on. In July this year, the first pilot project started, with Evonik and IBM set to co-develop a Cognitive Evonik-specific Chemical and Life Science Knowledge Corpus based on data analyzed by IBM Watson Explorer and the Watson Knowledge Studio. The resulting insights from this solution will be made available as a Digital Advisory Services, and will also be used for efficiency improvements.
Klasen said that Evonik China is among the front runners when it comes to digitalization. The regional organization is leveraging local channels such as WeChat to reach out to more potential customers and effectively provide tailor-made services to selected customers. The launch of the MEDOX? online store on the E-commerce platform has brought Evonik closer to individual consumers than ever before, and has helped them enjoy a better life. In addition, Evonik is also planning to establish an E-commerce presence in China on Alibaba.

Innovation to explore the opportunities under “new normal”

Evonik regards China as one of the driving forces of the global economy. The company now employs about 3,000 employees in China, and has a total of 10 production sites. When talking about the "new normal" of China’s economy, Klasen was optimistic: “China is moving from its old, low-cost growth drivers toward new industries fueled by innovation-driven development. I see continuing opportunities in China's chemicals market. The output of chemicals in emerging markets is expected to outpace production in developed countries. Emerging markets, such as China, are the mainstay of global economic growth.”
One opportunity for the chemical industry in China lies in the nation's increased urbanization, which is driving investment toward fixed assets such as new factories and infrastructure. The other is consumption upgrade, indicating improved living standards and demands on high-quality products which provide huge market potential for China’s chemical industry. Klasen said these are growth opportunities for Evonik in China. “On one hand, we are exploring new business opportunities in some key industries, e.g. electronics, electric vehicles, medical devices, and so on. On the other hand, we continue to focus on solutions to China-specific megatrends such as green development,” he added. China’s green development agenda requires robust regulation, greener energy, more resource efficient products and processes, which fit perfectly to Evonik’s growth strategy and its competencies.
Under the Belt and Road initiative, the China’s western regions enjoy support in infrastructure construction, foreign investment, environmental protection, education and talent retention, which will benefit multinational companies like Evonik. To enhance its local presence and business development, Evonik established a “Go West” strategy. The office in Chengdu was opened in 2012 and the company has gradually increased its presence in the local area. “By 2020, we want to significantly increase our sales in Western China,” said Klasen, confirming the goal of the “Go West” strategy.
Innovation in China for China is the key to securing Evonik’s long-term, sustainable growth in this region. The R&D center in Shanghai-Xinzhuang plays a key role in its global R&D strategy. Furthermore, Evonik also cooperates with research institutes, universities and other industrial companies so that the latest findings in chemistry, biology and physics can rapidly be transferred into the business, and to foster science and education. The Evonik Meets Science forum is regularly held in China every two years. In early September, researchers from Evonik met leading Chinese academics in Hangzhou to discuss the very exciting topic of additive manufacturing.           

Those who keep striving for changes tend succeed. Innovation strengthens Evonik’s position as a market leader. With the new structure and under the leadership of Dr. Klasen, Evonik has a bright future in China.