Competition in the performance materials industry in Asia has long been fragmented, with several small, local players battling for market share with leading international producers. Overlaying the intensified competition for customers in key growth markets, industry consolidation is ongoing.
The regulatory environment is a critical route-to-market challenge for performance materials companies in Asia. A beguiling number of regulatory systems and certification schemes exist, and local directives continue to evolve. As a non-negotiable rule, brand-holders and licensed distributors must constantly monitor the appropriate regulations in each market to ensure their products comply at all times.
Full compliance can be time-consuming and costly to manage, but it minimizes disruption to the supply chain – or at least allows firms to be fully prepared for an emergency scenario should it arise. Non-compliance can incur heavy financial and legal penalties, and significant damage to a company’s reputation, which can be difficult to recover in highly competitive markets.
An additional challenge is digitization. Companies are now able to sell directly to end-users through automated sourcing platforms and online marketplaces. They can also interact and share product information in real-time via digital applications.
“Digital channels currently account for a small proportion of performance materials transactions, largely because of the need to devise and create solutions that add value to users,” says Thomas Sul, Co-Head of Business Unit Performance Materials at DKSH. “However, the sales channel is shifting, as digital becomes a greater influence for product research and comparisons and price analysis. Digital transactions are expected in future to be part of a more integrated sales, marketing and service delivery process.”
Performance materials encompasses highly specialized materials and high-tech chemicals that are integral elements for sophisticated end-products. Being able to enhance a product by delivering trouble-shooting services, performance testing, technical training, evaluation support and benchmarking services, and access to high-performance equipment is more valued than ever by customers.
Access to real-time updates on market volumes, sales data and insights on products and projects are not just advantageous – they are a vital. Optimized market intelligence can be used to generate, develop and customize products, find new ingredients and applications, provide hands-on training and run acceptance tests to reduce the time-to-market.
Speed of delivery is a critical asset, both within national markets and for cross-border fulfilment. An integrated logistics service requires more than just-in-time delivery. Customized repackaging, including quality assurance, safety and compliance with industry regulations, are key factors.
The role of the intermediary remains pivotal for performance materials companies operating in the specialty chemicals, food and beverage, pharmaceutical and personal care industries. Companies are producing, marketing and selling highly specialized products and value-added solutions whose complex technical attributes need to be carefully explained to end-users.
A customer-centric model requires marketing and sales teams to demonstrate extensive technical knowledge of their product portfolios to create new solutions, and provide alternative modifications and reformulations for manufacturing and processing customers.
Because of their often diverse needs, customers are unable to simply “click and purchase.” Instead they require tailored product and service delivery solutions that add clearly defined value – and endure for a defined period after the initial purchase has been concluded.
A collaborative approach between MES providers and performance materials producers creates a nuanced understanding of the different requirements and demands of customers across Asian markets. By adding knowledge-driven context and insights, MES providers assist businesses to drive research and development, and deliver innovative product enhancements based on the specific needs of individual customers, and their end-users.