Dutch chemicals and coatings giant AkzoNobel is in prime position to push Chinese innovation, green development

AkzoNobel is a perfect fit to help China boost innovation and green development, key areas in the nation's action plan for the next five years, according to the Dutch multinational's CEO.

Ton Buchner says his company has been a pioneer in both sectors, which are highlighted in China's 13th Five-Year Plan for social and economic development between 2016 and 2020.

The company produces paints, coatings and specialty chemicals, with operations in more than 80 countries and regions. About 17 percent of its 45,000 employees worldwide are based in China.

AkzoNobel reported revenues of 1.8 billion euros ($2 billion) in China last year, about 12 percent of its global total, which makes China its second-largest market in terms of revenue.

Buchner recently spoke to China Daily about his vision and strategy in China. The following are edited excerpts of the interview.

Q: How will your new technology center in Shanghai benefit the local market and your operations?

A: The activities in China have become extraordinarily important. We have about 30 factories there. The reason we set up the center is because there is a tremendous amount of Chinese talent that we want to tap into, to help us research and develop our products for the Chinese market as well as support R&D in Asian and international markets.

Setting up a technology center in Shanghai means we are closely connected to our Chinese businesses, so if a customer has a question, they don't have to come to Europe to ask and then wait for an answer; they can go to the Chinese center and get the answer immediately.

Green development and innovation are two key areas of China's 13th Five-Year Plan. What are the opportunities and challenges for your company in the context of China's green development?

Sustainability is a big word, and to make it real sometimes is difficult. We use innovation to make the lives of our customers more sustainable. It allows them to save energy or to have a smaller carbon footprint.

One example is the new paints we've been introducing that have a special component that reflects sunlight better than normal paint. It significantly saves on the need for air conditioning in southern China in summer, and can save 5 to 6 percent of electricity costs.

We do the same when it comes to ships. We put coatings on ships that save the owner a lot of energy because their ships travel more smoothly through the water. We create products that come out of our innovation laboratory that actually give an advantage to our customers when it comes to sustainability.

How are you adjusting your business strategy to China's economic initiatives, like the new normal and the Belt and Road Initiative?

We see that China will be better connected with the rest of the world and is strengthening its role as a global player.

Key cities on the Belt and Road will develop in an accelerated way because they will become centers of trade, and we believe that we can also benefit and participate in these developments, which are not only going to be in China.

With our strong relationship with China, we believe these clear strategies that China has drawn up are strategies we as a company can participate in and can make China become successful.

How do you assess your company's prospects in relation to China's economic situation?

Economic growth in China is slower than before, but it's still a lot more than we see in other areas of the world. We don't see the same level of growth in Europe, in North America, and certainly not in South America. So while Chinese growth is slower, it's still the highest for the areas we operate in.

China is a firm part of our strategy, and we're committed to China, to our business, customers and employees. We've shown this by investing every year in China, and by putting R&D into China, so there's no reason to change that.

We're confident about China and will continue to invest in areas where we believe that growth will continue.

What would you say is your company's biggest achievement in China?

China has grown significantly. In a short period of time, it has become our second-largest market when it comes to revenue and the largest when it comes to employees.

I think that has been a successful trajectory, and it has to do with the fact we've always been very close to the Chinese market, and that most of our managers and employees are Chinese, so we're really in China with Chinese associates and colleagues. The greatest success is that we've been able to invest in a quick way in anticipation of that growth.

What's the secret to your success in China?

Among the many factors that have been making China successful is that the Chinese people are entrepreneurial. They are curious, put a lot of emphasis on education, and put great emphasis on moving China forward to the next level. The people have been the biggest driving force behind the success, and the government has been a strong component by setting clear directions.

One of the key factors for AkzoNobel's success is that when we go to China with our factories or products, we always go with the latest innovation.

What leadership qualities do you consider essential to developing a team in China?

Overall, the success of our leadership in China comes from the fact they're local, they're close to the customer, they're running diversified teams in different places in China and they make sure they deliver every day to the best of their ability.

For leaders in China, it's important they give clear directions as well as allow space for the entrepreneurial spirit that is so strong in Chinese culture.

The advantage I have as a leader in AkzoNobel is that I've spent a lot of time in Asia and in China. Understanding how China works is important, and our leadership in China feels this understanding is present at headquarters.

What do you consider important when cooperating with Chinese partners?

Incredibly important is a strong respect for local culture. Many cultures are different, and no one should tell someone what to do. You should first listen, understand the cultural strength of a country and make sure you find the best solution that works for both parties.

In addition, you have to invest in the relationship and in the business activities. You need to deliver what you have promised, which is always the case, but in China it's very important and fosters respect between the two parties.

How do you handle challenges your team encounters in China, if any?

The way the housing market in China has developed can be challenging, as we really need to estimate where the housing market is going, not only in Beijing, Shanghai and Guangzhou, but it also in western cities and lower-tier cities. Also, policies regarding the housing market have changed.

The second challenge we are looking at carefully is the move from an industrial economy to a domestic consumption economy where we have great opportunities, but we want to make sure that we move with the same speed as the Chinese economy.

What's your view on the Chinese Dream, and do you have any dream for your company in China?

The Chinese Dream is clearly driving the country to become a responsible global player, and it's a logical dream to have.

Our dream is that as a company with fantastic brands, good market positions and great people in China, we want to be a market leader in China and at the same time support Chinese players as they go international.

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