Innovation & Greener for Unlimited Potential

  • Date:   2019-09-10      
  • Author:   CATIA      
  • Source:   CATIA     
  • Visits:  1855

China Adhesives and Tape Industry Association (CATIA)

Interviewed with Alvin Hu, Vice President Polymers at WACKER Greater China

The WACKER Group is a globally active chemical company headquartered in Munich, Germany. Spanning the globe with four business divisions of SILICONES, POLYMERS, BIOSOLUTIONS and POLYSILICON, WACKER currently operates 24 production sites, 22 technical competence centers and 50 sales offices worldwide. In 2018, the Group generated sales of €4.98 billion. Greater China contributed €1.05 billion which made it the world's largest single market for WACKER. With an accumulated investment of over €600 million, WACKER Greater China operates two technical centers (in Shanghai and Shunde), three production sites (in Nanjing, Zhangjiagang and Shunde) and seven sales offices (Shanghai, Beijing, Guangzhou, Chengdu, Shunde, Hong Kong and Taipei). WACKER products are widely applied in adhesives and downstream sectors.


26 years into exploring and expanding businesses in China, WACKER has always been the industry leader with the greener and innovative solutions. With the 22nd China Adhesive and Tape Annual Conference sponsored by CATIA around the corner, Liu Pengcheng, Manager of Information Dept. of CATIA, visited Mr. Alvin Hu, Vice President Polymers at WACKER Greater China, in WACKER R&D Center located in Shanghai Caohejing Hi-Tech Park. Alvin Hu shared his insights into the future development of China’s adhesives market and talked about the efforts of WACKER POLYMERS in promoting green and innovative development.


Alvin Hu has been working with global multinationals for more than two decades. He took the position of Senior Marketing Manager at GE Silicones (China) in 1995, and became Business Director of silicone sealants at WACKER Greater China in 2002. In 2009, Alvin Hu was appointed as the General Manager of Wacker Dymatic Silicones (Shunde) Co., Ltd., and took over Chairman of Executive Board in 2014. Since 2016, He has been serving as Vice President of Wacker Chemicals (China) Co., Ltd., responsible for the polymers business.


CATIA: Could you please brief us on Wacker Chemie’s polymer dispersions business in the global market and its performance? What measures has WACKER POLYMERS taken to promote green and innovative philosophy globally?


Alvin Hu: As WACKER’s second largest division among the four, WACKER POLYMERS has more than 80 years of history, with a commitment to dispersible polymer powders (DPP) and VAE dispersions. WACKER has a global network of 3 DPP production plants (in Burghausen, Germany; Calvert, USA; and Nanjing, China) and 5 dispersions plants (in Burghausen & Cologne, Germany; Calvert, USA; Nanjing, China; and Ulsan, Korea) supported by 15 technical/R&D centers, to offer more than 200 products.


In 2018, WACKER POLYMERS remained firmly on its growth course in sales, with an increase of 3% year-over-year, to around €1.3 billion, accounting for a quarter of the Group's total sales. However, the overall profit margin saw a decline, as the growth in sales was offset by a continuous rise of raw material price. Thanks to the increasing market demand for environmentally-friendly building materials and the overall favorable market conditions, Greater China was where WACKER witnessed the fastest growth in VAE business worldwide.


As an innovative chemical company, WACKER aims to achieve a balance between creating value for customers & stakeholders and making vital contributions to global progress & sustainable development. Our products, technologies, and processes meet the highest standards. For years, sustainability has been part of WACKER’s production and business processes. To this end, we have been working to strike a balance between economic, environmental and social goals. In fact, WACKER has set three clear sustainability goals. First, to create added-value by providing sustainable products and solutions to customers. Secondly, to lower emissions, especially carbon emissions. We will optimize our production process to improve recycling and reuse, and take measures in energy conservation and emission reduction to reduce impact on the environment. One of our greatest strengths is our closed material loops, where we use byproducts from one production stage as starting materials for making other products, which reduces our consumption of energy and other resources. Thirdly, to strengthen cooperation with existing and potential partners, and work jointly toward a more sustainable (upstream & downstream) value chain. In short, WACKER is committed to “building an ecological civilization by adhering to green development”. Green and innovation is the market megatrend and will keep our company standing out in future competition.


CATIA: WACKER’s VAE products are widely used to formulate adhesives for paper & packaging, wood and textile bonding. What’s WACKER’s opinion on the Chinese VAE market?


Alvin Hu: I think China is a very promising market for VAE dispersions, for mainly two reasons. If you look at the macro level, China is the world’s second largest economy next only to USA. 30% of the global GDP growth in 2018 came from China and that number signifies huge market potential. 30 years of high-speed growth in the chemical industry since reform and opening-up has helped China replace USA as the world’s largest manufacturer of fine chemicals. It is estimated that by 2020, the total output value of chemical products in China will reach 16 trillion RMB. Notably, the pursuit to better quality and brand is spurring the transformation and upgrading of Chinese manufacturing sector. The market’s rising demand for new materials and high-quality, high-end products will continue to catalyze a high market growth rate in the future. I am confident that the adhesives market, VAE dispersions in particular, will grow faster than China’s GDP (our Five-year Plan expects GDP to grow at 6%). Looking at a more micro level, you will foresee a greater demand for VAE dispersions as they are water-based and light weighted, with low carbon footprint, low odor, and low VOCs compared with SB latex and SA emulsions. These features meet the needs of China’s adhesives market and will be applied to more areas.


CATIA: How has WACKER been affected by the changes in business environment including industrial restructuring, implementation of environmental protection policies, and the macroeconomic uncertainties followed by Sino-US trade spats? How does WACKER perceive the business environment it is currently operating in?


Alvin Hu: The Sino-US trade friction earlier this year has indeed certain impacts on China and the global economy. However, the data released by the National Bureau of Statistics indicated that China’s overall economic conditions remained stable. As a globally active company, WACKER has always supported trade multilateralism and liberalism. So far, the current Sino-US trade friction doesn’t have much impact on WACKER China. Finally, policies concerning structural adjustments and environmental protection have limited restriction on innovation-driven multinationals with high requirements on environmental protection.


I want to say a few more words on why I think the Chinese market is promising. It all comes down to three reasons. Firstly, a more stable economy and a healthier market are foreseeable with both "Twelfth Five-Year Plan" and "Thirteenth Five-Year Plan" talking about measures to adjust industrial structure and expand domestic demand. Secondly, the Chinese adhesives market has huge unleashed potential as adhesives have become a fundamental component of people’s daily life. Taking the construction industry as an example, the urbanization rate in China, which stood at 54.8% as of 2014, is expected to exceed 60% by 2020 and reach 70% by 2030. That is, China will complete the transformation into an urban society during the "Thirteenth Five-Year Plan" period. This process will be accompanied by considerable market demand from the 13 million rural residents moving to cities each year. Thirdly, with the government’s appeal for high-quality and green development, and supply-side structural reforms, outdated capacities and products will give way to green and innovative ones. Therefore, green, sustainable products and solutions as well as companies in this area will be rewarded with greater demands and more opportunities.


That’s why I say trade frictions, structural adjustments, stricter environmental protection regulations, and other seemingly unfavorable conditions will in fact push domestic enterprises to develop in a healthier way. Companies that value green and innovative growth will actually benefit from it, facing more opportunities. WACKER will continue to keep up with and place high value on the Chinese market. I am convinced that in a decade China will surpass USA as the largest VAE polymers single market in the world.


CATIA: WACKER completed a debottlenecking project for VAE dispersions in Nanjing late last year, adding 30,000 metric tons of capacity. Could you please give some more details of this project?


Alvin Hu: In 1993, sales offices were first set up in Taipei and Hong Kong as WACKER’s first attempt to open up the Greater China market. Favorable market feedback there encouraged WACKER to expanding businesses in the Chinese mainland in 1995, opening new sales offices in Shanghai and Guangzhou. In 1997, Hong Kong handover and economic reform in mainland highlighted the importance of the mainland market to WACKER’s leadership, and finally all WACKER’s businesses rolled out across China. In 2000, WACKER established a technical center in Shanghai to provide comprehensive technical support to its customers in China and the Asia Pacific region in some extend. In 2010 and later in 2009, WACKER completed the world-class Zhangjiagang integrated silicone manufacturing site and Nanjing polymers production site, respectively.


Located in Nanjing Chemical Industrial Park, WACKER’s Nanjing Production Site covers an area of 130,000 square meters and started operations from November 2009. With DPP as its sole product at the very beginning, commercial VAE dispersions and PVAc solid resins began to be manufactured respectively in July 2010 and 2015. We completed a debottlenecking project for VAE dispersions late 2018, adding 30,000 metric tons of capacity. The site’s current capacity of DPP, VAE dispersions and PVAc is respectively 60,000, 150,000 and 20,000 metric tons per year.


Producing the three products at the same site means that shared technology, facilities and energy supply would translate into synergies and lower consumption of energy and other resources, which is conducive to higher material utilization efficiency and less wastes and transportation, hence contributing to sustainable production. Since its first operation around ten years ago, WACKER has continuously launched new products and increased production capacity. Up until now, over €100 million has been invested in WACKER’s Nanjing site, and the level of investment is set to further expand.


CATIA: Environmental protection and safety are increasingly becoming the top concern in home decoration consumption. What plans and products has WACKER offered in this area?


Alvin Hu: WACKER has two plans for offering products in innovative environmental protection and safety. First, to develop more eco-friendly and healthy products by capitalizing on the advantages of VAE technology, such as being water-based with low odor and low VOCs. Second, to enhance the development of renewable materials for the industrial production to formulate green products such as powder coatings and green coatings. The world is still challenged with the industrialization of renewable materials though, as improvements are required in cost saving, reliability, technology, and processes.


At this year’s CHINA ADHESIVE exhibition, we will introduce three new products, i.e. powdered wood adhesives, VINNAPAS® EP 701 K VAE dispersions, and bio-based coating. Powdered wood adhesives, as no longer in the traditional liquid form, are much easier to store and have lower packaging and transport costs. They will be more suitable for use in Northeast China and other northern regions where it is colder and wood adhesives are in high demand. They can also be used in spring and winter times, which breaks the restrictions. VINNAPAS® EP 701 K VAE dispersion features higher water-resistance and excellent adhesion on difficult-to-bond substrates, such as textiles and paper. Bio-based coating is more environment-friendly with less VOCs.


CATIA: This year marks the 10th year of WACKER POLYMERS in China, and the 8th year of the founding of WGC Polymers R&D team in Shanghai. Could you talk about the achievements WACKER has made in Greater China over the past years?


Alvin Hu: Over the past 30 years in China, WACKER China has developed, step by step, from a sales office of only about 10 people to a big corporation maintaining leadership in almost all the sectors it is involved. We have moved from simply selling products to understanding the Chinese market and its customers, and forming an integrated platform including R&D, procurement, production and sales. As WACKER’s largest single market, Greater China generated sales of 1.05 billion euro in 2018, accounting for 20% of the Group’s total sales. Greater China has become one of WACKER’s most important markets.


From selling products to manufacturing and setting up R&D teams in Shanghai, WACKER’s continued efforts in extending R&D capability and expanding R&D teams have successfully transformed WACKER’s businesses in China from investment-driven to innovation-driven. With innovation and sustainability at the core of all its business activities, WACKER endeavors to explore and bring in innovative products that are suitable for the Chinese market, enable higher living standards and healthier ecological environment. In the past few years, WACKER Group has always spent above 3% of yearly sales revenue on R&D. Up until now Polymers Division at WACKER Greater China has developed more than 10 new products. Sales from new products account for over 30% of the total product sales in China. In the future, WACKER POLYMERS will continue to invest in China in the following three areas. First, continue to expand R&D capacity. In the first half of 2019, we have launched our new Food Application Lab and Concrete and Cement Competence Center in Shanghai. A new E-mobility competence center is also in preparation and is planned to come later this year. Secondly, continue to step up efforts in developing green, sustainable products. Areas include business procedures, R&D, purchasing, logistics, production, products and social responsibility. Thirdly, to maintain high standards in emissions, health, and safety at Nanjing polymers production site. Last year, WACKER Nanjing Site invested several millions of euros in upgrading the waste water treatment. With WACKER Operating System (WOS) program, the energy consumption per unit produced at the site was reduced by 2%. Having achieved excellent safety performance with a zero-accident record in the past 10 years, it was recognized by the local government as “2018 Good Safety Production Unit in Jiangbei District”. WACKER is also actively helping other companies in the park to improve their process safety management by organizing safety training. Conducting “Open-to-Public Dayˮ event every year, WACKER serves as a role model in terms of fulfilling social responsibilities.


CATIA: With almost 30 years of operations in China, how does WACKER value the impact of China’s foreign investment environment on WACKER’s growth? What are the adhesives-related projects and measures in the future?


Alvin Hu: Foreign Direct Investment (FDI) data shows that China ranks the second in the world, next only to USA, accounting for more than 10 percent of the world's total FDI in 2018. In the first half of this year, the actual-used foreign capital in China reached 70 billion U.S. dollars, a 3.5% increase compared to last year. WACKER’s development in China is attributed to the growth of Chinese market, to some extent. In the past 30 years, China’s economic growth has presented many valuable opportunities to WACKER.


Today’s investment environment in China is much more open, more transparent, and predictable for fair competition. We will operate in an even fairer market with the modification of Special Management Measures for the Market Entry of Foreign Investment in Pilot Free Trade Zones (Negative List) in 2018 and 2019, and the implementation of Foreign Investment Law of People's Republic of China, which will take effect on January 1, 2020. Additionally, a series of measures taken by the Chinese government call for not only more flexible and simplified work and more emphasis on intellectual property rights but also lower taxes and easier export rebate processing. These improvements in business environment all boosted foreign investors’ confidence in expanding business and investment in China. I have absolute confidence in the investment environment and WACKER’s operation in China for the following 10 years. Favorable business environment and huge untapped market potential will enable WACKER to focus on local innovation, tailor more of its products to local needs and give more attention to market segments.


In terms of adhesives, WACKER will continue its efforts to promote new products (i.e. powders, organic coatings) and technologies. They will be more easily accepted by the market as China is stepping up its green sustainable development processes. The new joint lab officially launched this year in collaboration with Oriental Yuhong aims to strengthen cooperation between upstream and downstream customers and develop new products according to different market demands. Cooperation with external research institutions is also conducive to stronger R&D capabilities. WACKER is working in partnership with a number of domestic universities and colleges on application technology development and research.


CATIA: What new products will WACKER POLYERS launch at this year’s CHINA ADHESIVE conference and exhibition? Could you please share some thoughts on the development trend and prospect of China’s adhesives market?


Alvin Hu: At this year’s CHINA ADHESIVE conference and exhibition, we will introduce four new products: powdered wood adhesives, VAE dispersions (VINNAPAS® EP 701 K), bio-based coatings, and new powder coating.

We expect the adhesives market in China to maintain stable growth in the following decade as adhesives find applications in almost every aspect of people’s daily life. In terms of the future development, we want to make adhesives that are greener, eco-friendlier, water-based, renewable, and of higher quality. Moreover, adhesives will be applied to more specified areas to meet customers’ new demands such as the application of VAE dispersions in shoe glue.


In short, we are very optimistic about the future development of China’s adhesives market. We believe that under the coordination of CATIA, both upstream and downstream adhesives enterprises will conduct innovation in joint hands in the collective efforts of creating high-performance, green and environment-friendly products and shaping a more sustainable and healthy adhesives industry.