Control the new wave of market growth

Secondly, the existing chemical suppliers must look beyond the local market and consider how to take advantage of the dynamic changing industry pattern – the rise of chemical production in countries with raw material advantages and the shift of demand growth to emerging markets. Established companies have to ask themselves how they can unite with new players, whether to build business in resource rich countries, or build capacity in China and other high growth markets, or both.

Then they have to think about how to improve and maintain their attractiveness as partners. Many established companies operate a wide business portfolio; they have to consider how best to articulate the value proposition they bring to potential partners. Innovation – the creation of new technologies and new products – has always been the way for the profit growth of the chemical industry, and also the advantage field of existing chemical suppliers. Companies with the technology needed for new petrochemical plants in oil producing countries will be in the best position to compete in any joint venture. Companies with much-needed expertise in fast-growing emerging markets will attract more interest from governments in these countries; therefore, they can better access these markets.

Existing enterprises must also consider how valuable the market access they provide in their own markets is to new producers. They should consider the best way to provide this service. One possibility is a joint venture partner with a new producer to enable it to gradually reduce its production.

Finally, chemical suppliers must recognize the strategic choices they face. What bargaining chips does the company have? What kind of chips does it want to develop? Is it strong enough to remain independent? Should it consider cooperation or alliance? Is it more meaningful to focus on the Middle East than China? If a company decides to focus on China, should it try to form an alliance with Chinese enterprises or establish a larger direct presence in China? The company must carefully consider, for example How to use their bargaining chips to create maximum value – these chips cannot be used many times.

With oil producing countries and high growth developing market participants becoming the leaders of the industry, the development of global chemical industry has entered a new stage. These new players focus on monetization of resources and economic development, especially job creation in some countries, rather than traditional shareholder value, so their rules are different from those of traditional industry leaders. As a result, the pattern of competition is changing. Old brand enterprises must recognize and adapt to the changes that are taking place, while newcomers should build new capabilities and give full play to their advantages in the market

As the global economy accelerates after the crisis, executives are understandably focused on “business as usual.”. “However, as the major emerging economies recover faster than the developed countries, the changes in the pattern of the chemical industry described above can be said to have been accelerated by the crisis. As a result, the window of opportunity for incumbents to engage with newcomers may close earlier than they expected. The number of countries with special resource advantages is limited, and major emerging markets, such as China, may pursue policies in favor of domestic leading enterprises. Old brand enterprises should take advantage of any momentum gained from the recovery of traditional business to enhance their position in the new industry pattern.

By admin

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