CEO Q&A – Ton Büchner of AkzoNobel

By Wang Mingjie in London (chinadaily.com.cn) Updated: 2016-08-30 23:23

Ton Büchner, CEO of AkzoNobel

Ton Büchner, CEO of AkzoNobel, says the Chinese government's new initiatives in the 13th five year plan, such as innovation and green development, are a perfect fit for AkzoNobel, as the company has been a pioneer in that regard.

The Dutch company has been ranked top of the Dow Jones Sustainability Index worldwide four years in a row, and in a newly released FTSE4Good Index Quarter 2 report, the company was also named as number one in the area of sustainability in its industry, according to Büchner.

Büchner, 51, a Dutch national, who worked in China for 4 years as chief representative for the Swiss corporation Sulzer and later became its CEO, says his previous dealings with China have given him a unique insight on understanding Chinese business cultures and working with local partners.

He is an engineer by training, having earned his Master of Science in Civil Engineering at Delft University of Technology, in The Netherlands. He also has a Masters of Business Administration from IMD in Lausanne and has attended the Stanford Executive Program in California, USA.

Specializing in paints, coatings and specialty chemicals, AkzoNobel owns the paint brand Dulux, has operations in more than 80 countries and more than 45,000 employees, about 7,500 of them in China. Last year, AkzoNobel China had revenue of 1.8 billion euros, about 12 percent of its global total, and China is the parent company's second-largest revenue contributor.

Büchner recently spoke to China Daily about his vision and strategy for AkzoNobel's China operations. Following are edited excerpts of the interview:

1. How will your new technology center in China benefit the Chinese market and your operation as a whole?

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

By setting up the technology center in Songjiang, Shanghai, the largest technology center in China, we are closely connected to our Chinese businesses, so if customers have a specific question, they do not have to come to Europe to ask the question and then wait for a day or two for it to come back, they can immediately go to the Chinese center and get the answer very quickly.

2. Green development and innovation have been put forward as two of China's major ideas in its 13th Five Year Plan. As a company that specializes in paints, coatings and specialty chemicals, what do you think will be 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 quite difficult. We use our innovation where we make products that make the life of our customers more sustainable. It allows them to save energy or allows them to have lower levels of CO2 or carbon footprint.

One example are the new paints that we have been introducing that have a special reflective component in it which reflects the sunlight so much better than the normal paint that it significantly saves on the air conditioning in the hot areas in the south of China in summer, so you can actually save 5 to 6 percent of electricity bill by applying our paints.

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.

3. What are your business strategies in adjusting to China's latest economic initiatives like the New Normal and Belt and Road initiatives?

What we see is that China will be better connected with the rest of the world, and is going to strengthen its role as a global player.

Key cities on the one belt and road will be developing in an accelerated way because they will become the centers of the trade and we believe that with our business, we can also benefit and participate in these developments that are not only going to be in China, but also going to be done by Chinese sets of contractors or Chinese sets of support.

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

4. How do you assess the prospects of your company in China in conjunction with the current economic situation?

The economic growth in China indeed is slower than before but it is still a lot more than we see as growth levels in other areas in the world. We do not see the same level of growth in Europe, in North America, and certainly not in South America, so whereas the Chinese growth is slower, it is still the highest growth worldwide in the areas we operate.

For us, China is a firm part of our strategy and we are committed to China, to our business, customers and employees. We have shown this by investing every year in China, and by putting our R&D into China, so the fact that growth has gone a little bit down, as for us there is no reason to change our very clear strategy in being successful there. We are still confident in China and will continue to invest in those areas which we believe the growth will continue.

5. What would you describe as your company's biggest achievement in the China market?

China has grown significantly and we have been able to grow with the success of China in a way that within short period of the time, it has become the 2nd largest country when it comes to our revenue and the largest country when it comes to our employees.

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

6. In your view what is the secret of your business' success in China?

Among the many factors that have been making China successful, has been the people in China that are very entrepreneurial. They have been very curious, put a lot of emphasis on education, and put great emphasis on moving China forward to the next level of success. I think the people in China have been the biggest drive of the success and the government has been a very strong component by setting very clear directions.

I also think one of the key success factors for AkzoNobel in China is the fact that when we go to China with our factories or our products, we always go with the latest and newest innovations, and have never been to China with products two generations old. The manufacturing footprint over here is one of the most modern ones we have worldwide and that has been a great strength.

7. What essential leadership qualities do you consider important when leading your team to grow in the Chinese market?

Overall, the success of leadership in China is one that they are local, they are very close to the customers, they are running a set of diversified teams in different places in China and they make sure they deliver every day the very best to their ability.

For a leadership in China, it is important that they are on one side giving clear direction but also give a lot of space to the entrepreneurship that is so strong in the Chinese culture.

The advantage that I have as a leader in AkzoNobel is the fact that I spent quite some time in Asia and in China. The cultural understanding of how China works is very important and the leadership in China feels that this understanding is present in their leadership in the headquarters.

8. What do you consider important when cooperating with local partners in China?

Incredibly important is the strong respect for the local culture. I think many cultures are different and nobody should tell somebody else what to do. You should first listen, understand the cultural strength of the country and make sure you find the best common solution that works for both parties.

In addition, you have to invest in the relationship, as well as in the business activities. I think you need to deliver what you have promised, which I think is always the case, but in China it is very important and develops the respect among two parties.

9. How do you handle challenges your team has encountered in China, if any?

We think 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 the cities which are more western and more different tier cities than tier one cities. Also, the policies around the housing market have changed.

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

10. What do you think about the Chinese Dream? What are the dreams you have for your company in China?

The Chinese dream is very clearly driving China to become a firm responsible global player in the world and it's a logical dream to have.

Our Chinese dream is that as a company with fantastic brands, good market positions, and great people in China, we want to be one of the leaders in all of businesses in China and at the same time be one of the supporters of the Chinese players when they go international.

Bio

Ton Büchner

CEO and Chairman of the Board of Management and the Executive Committee of AkzoNobel

Age: 51

Career:

2012 – Present: CEO and Chairman of the Board of Management and Executive Committee, AkzoNobel, (The Netherlands)

2007 – 2012: CEO, Sulzer, (Switzerland)

1999 – 2007: Various positions, including President of two divisions, Sulzer, (Switzerland)

1996 – 1999: Chief Representative and General Manager Compressors, Sulzer, (China)

1994 – 1996: Strategic Development Manager, Sulzer Management, (Switzerland)

1992 – 1994: Project Manager, John Brown Engineers & Constructors and R.J. Brown and Associates, (Netherlands and Singapore)

1990 – 1992: Project Design Engineer, Project Manager offshore pipelines, R.J. Brown and Associates, (Indonesia, Malaysia, Singapore)