Chinese production costs have been skyrocketing of late, meaning global OEMs are taking a more flexible approach to projects in Asia, including transferring production from China to Southeast Asian countries such as Thailand and Indonesia. In parallel with this trend, plastics distributors, are regionalizing their footprints in order to better serve their customers across Asia.
Take Dutch distributor IMCD, for example. The company acquired Singapore-based plastics distributor Paceco Industrial Supplies, whose footprint spanned Singapore, China and Malaysia, in 2012. "We had the option of setting up a new organization or entering through an acquisition," says IMCD Global Product Manager, Plastics, Patrick van Vugt, who will be relocating from the Netherlands to Singapore in August this year to spearhead operations at the regional headquarters. "Paceco's good platform in Asia, including two locations in China, Malaysia, and Singapore, and its strength in engineering plastics made sense to us. It put us well on track to our objective of becoming a leading regional distributor of high-end specialty plastic compounds."
Globally, IMCD's clientele consists of converters and compounders. "95% of our current Asian business valued at EUR40 million is with converters," notes Van Vugt. "Eventually we want to start selling additives to local compounders and then sell their compounds to converters."
Since the 2012 acquisition, IMCD has set up new operations in Thailand and the Philippines in the past two years, with an office in Vietnam next on the agenda. "Thailand and Indonesia are high priority markets for us," says Van Vugt, "with Malaysia also up there. The Philippines and Vietnam are lower priority for now."
IMCD's reach enables it to follow cross-border projects in Asia, according to Van Vugt. "And we also have all-round capability when it comes to supplying compounds. "Our customers need packages, meaning entire product portfolios for specific projects. We can supply this and we also have the technical service capability to back this up, which differentiates us from local distributors."
IMCD is not the first European distributor to make an acquisition in Asia. In 2012, Belgian company Ravago SA expanded its presence in the Asian polymer market by acquiring distributor Acumen Engineering of Singapore.
Acumen Engineering was founded in 2000 and currently represents several resin suppliers, marketing predominantly engineering plastics to the electronics and automotive markets. Acumen has sales offices and local warehouses in Singapore, Malaysia and China. Acumen continues to operate as a unique and separate channel as a division of Ravago.