Whether by mergers, acquisitions or joint venture - chemical distributors are looking to increase their footprint in overseas markets. Surfachem MD, Dr Richard Smith, discusses corporate strategy and focus in markets of Poland, Scandinavia, Benelux and Brazil, and key factors driving the decisions on global operations and expansion strategy for Surfachem and 2M Holdings.
Poland, Brazil and China have been the targets for Surfachem, part of 2M Holdings. Dr Richard Smith, Surfachem’s managing director, says investment in Poland and Brazil was driven by its sales and marketing activities, that in China was to secure the supply of raw materials for its surfactants product portfolio, SURFAC.
The company employed different strategies in each market. For example, in Poland, Surfachem placed its own staff into the market with support from UK head office, with a medium-term strategy of establishing a fully-owned and locally-managed subsidiary.
In Brazil, a joint venture was formed with Surfachem holding the majority stake, leveraging the skills and connections of the local partners which were supported by Surfachem’s business model and contacts. Formed in July 2014, the venture with Vitrine Quimica supplies specialty chemicals to the country’s personal care, household, institutional and industrial care markets.
Dr Smith says Surfachem’s strategy for growth in new markets is driven by an assessment of internal capabilities, especially senior management time and the financial resources required to support the new venture.
Being part of 2m Holdings, which includes five chemical distribution and related service companies, enables a flexible approach to entry strategies, states Smith. “Leveraging services from other companies within 2M Holdings enables synergies to be created along various parts of the chemical supply chain,” he says, adding that logistical support from existing parts of the group was also important as a stepping stone to the subsidiary having its own local infrastructure.
Surfachem’s focus for the immediate future is to consolidate and grow its sales positions in its existing overseas operating in Brazil, Norway, Poland and Benelux. However, Dr Smith adds: “We are evaluating a number of markets within the MINT [Mexico, Indonesia, Nigeria, Turkey] and CIVETS [Colombia, Indonesia, Vietnam, Egypt, Turkey, South Africa] group of countries which will form part of our medium-term strategy for growth. We have narrowed down our potential countries to enter in the future, but will make a final decision based on market and competitive factors.” Political and social stability will be key factors in determining market entry, he states.
The article is published in FECC Supplement 2015 and is courtesy of www.icis.com